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Online advertising off to slow start

Online advertising is off to a slow start this year, according to a new report from Jupiter Media Metrix.

Ad impressions and spending did not surpass last year's level until the second week in November, according to a report released Monday by Jupiter Media Metrix (Nasdaq: JMXI). A research note from Merrill Lynch suggested that high order numbers have the bigger e-tailers on track for strong quarters.

Online advertisers are also feeling the forces of natural selection at work. During the first 6 weeks of the fourth quarter, Jupiter said, 50 percent of all online retail ad impressions came from just 14 of roughly 2,700 retail online advertisers. (Nasdaq: AMZN) led the pack, with Barnes& (Nasdaaq: BNBN) following closely on its heels, and eBay (Nasdaq: EBAY) flattening off.

"By starting slow, retailers do not seem to have learned much from last year's holiday online advertising lessons," said Charles Buchwalter, vice president of media research for Jupiter Media Metrix's AdRelevance division.

The report, which covers October through mid-November, showed that while the number of retailers advertising online almost quadrupled to 2,313 from 1999's 657, ad impressions are growing slower, total median impressions per retailer are down and the number of holiday-themed ads in October 2000 is less than half of what it was last year.

Total ad impressions per retailer were down 82 percent in October 2000, falling from 130,000 impressions in 1999 to 23,000 this season. Some of the slow-down in impressions may be due to the increasing crowds, the report suggested. This year shows a significant increase in total retail advertisers overall.

The report also said this year's top 2 product categories are the same, though their rankings have been reversed. "Books, music & movies" has unseated "auctions" as the most advertised category in 2000.

Though once again leads the holiday online advertising charge in 2000,, which ranked six last year, is now the second largest. (NYSE: BBY) posted one of the strongest online ad gains, having started earlier. It is now the number eight advertiser.

Some of 1999's top advertisers --,, (Nasdaq: BYND), (Nasdaq: DSCM) and Office Depot (NYSE:: ODP) -- have fallen off the charts all together. also had the most orders so far this year, but the correlation between spending and orders hasn't worked as well for some other companies, according to a research note from Merrill Lynch analyst Henry Blodget.

Companies with the strongest year-over-year order increases for the first few weeks included Amazon at 35 percent; eBay at 50 percent; at 200 percent; (NYSE: TGT) at 300 percent; and (NYSE: WMT) at 500 percent.

Sites with notable year-over-year stagnation in orders include at negative 15 percent, at negative 3 percent, and eToys at negative 10 percent.

Blodget also looked at online holiday shopping and how it will affect quarterly reports of major players involved.

Year-over-year traffic growth suggests Amazon, eBay, and other leaders are on track to meet fourth quarter estimates, Blodget said. Yahoo! (Nasdaq: YHOO) reported a 100 percent increase in Black Friday orders over 1999's, and America Online (NYSE: AOL) reported a 50 percent increase. These figures suggest Yahoo! is on track to facilitate $2 billion in fourth quarter commerce, and AOL $5.25 billion, Blodget added.

According to Nielsen NetRatings, eBay's traffic from U.S. homes in November is running about 50 percent ahead of last year. Blodget expects gross merchandise sales to rise about 70 percent year-over-year in the fourth quarter.

Statistics from Nielsen NetRatings also show online shopping on Friday, Nov. 24 increased 27 percent from last year's day after Thanksgiving.

According to Blodget's statistics, the three heaviest weeks are the next three.