Are TV ads a waste of dot-com money?

As the dust settles following the explosion of fashion retailer Boo.com in May, dot-com brand managers are beginning to change their media strategy to find more effective ways of driving traffic to their websites.

The latest warning that TV advertising is not a successful way to attract Net users comes from a survey by WebProbe.

The research company found only 0.9 per cent of 13,000 respondents visited a website after seeing it advertised on TV.

The figure rose to 13 per cent for newspaper ads, 14 per cent for magazines, 15 per cent for word of mouth and 34 per cent for online ads.

WebProbe chief executive Ken Tipton says: “It was a widely held view that TV advertising was the most influential vehicle to drive traffic, but our figures debunk that view.

“It will be far more difficult for dot-com brand managers to justify TV budgets now. Frankly, they shouldn’t want to.”

A move away from TV advertising may already be under way. Predictions that ITV is expected to suffer a 14 per cent drop in trading this October compared to last year (MW August 24), due in part to a fall in dot-com advertising, are backed by the latest figures from ACNielsen MMS.

In the year to January 2000, the top 24 dot-coms spent &£111m on TV campaigns. But in the first six months of this year, just under &£41m was spent. If the trend continues, this will equate to roughly a &£30m drop in outlay – nearly a quarter down on the previous year’s total spend.

The month-by-month trend between January and June shows dot-coms spending peaked at &£9.3m in March. But this fell away to just under &£6m by May, following dot-com market jitters.

There was a recovery to &£9m by June, suggesting dot-coms’ faith in TV ads is slowly improving. But companies will now be thinking much harder about using a greater mix of media.

Jupiter Communications, a research company, claims online ad budgets are set to rocket among major companies in the next five years.

In 1999, e94m (&£59.12m) was spent on online ads in the UK; Jupiter predicts this will rise to E1.4bn (&£908.81m) by 2005.

Jupiter’s survey of marketing executives shows 73 per cent plan to increase online ad spend in the coming year, compared to 43 per cent who plan to boost magazine spending and 17 per cent who expect to buy more newspaper space.

Ray Taylor, managing director of online media agency Eyeconomy, says dot-coms are wising up to the benefits of integrated campaigns.

He says: “Web campaigns we run for dot-com clients typically produce response rates of between two to ten per cent against {WebProbe’s figure of}one per cent for TV ads – and at a much lower cost base than TV. We are running a campaign with Jobpilot.co.uk, producing an overall average cost per response of less than 20p.”

But some marketers remain adamant that TV is best for dot-com brand building, claiming it drives traffic. A survey by MMS, conducted between April 1999 and March 2000, contradicts the findings of the WebProbe survey.

MMS tracked three dot-coms: Letsbuyit, which offers consumers group discounts; Zoom, the shopping and community site jointly owned by Arcadia Group and Associated New Media; and Bigsave, an online discount store.

Letsbuyit spent around 90 per cent of its &£2.5m advertising budget on TV; Zoom spent its entire &£2.5m budget on press ads; and Bigsave spent &£2m on a mixture of radio, outdoor and press, but no TV.

The results show Letsbuyit had a 30 per cent brand awareness rate, followed by Zoom with 21 per cent, and Bigsave with just four per cent.

A spokesman for AskJeeves, the Internet search engine, also disagrees with the WebProbe report.

He says: “TV continues to be the quickest and easiest way to get mass awareness. It may be different for dot-coms targeting speci fic categories, but I challenge WebProbe’s findings.

“We tracked our last TV advertising and saw the numbers of visitors to our website rise significantly immediately after the campaign.”

But brand building TV campaigns can fail. Boo.com spent a large proportion of its estimated &£15m above-the-line budget on TV ads through BMP DDB, but was heavily criticised for using trendy ads that failed to create brand values.

Marketers at smaller dot-coms agree TV is the best way of brand building – but the medium doesn’t necessarily drive traffic to a site.

James Macdonald, marketing director of Internet radio station Stormlive.com, says: “There’s so much dot-com marketing competing for the same audience.

“Unless you have silly money and are prepared to carpet bomb, the actual traffic generation is simply not as cost-effective as other media.”

The trend seems to be that the big Internet players are con tinuing to splash out on TV brand-building campaigns. But for poorer dot-coms, tight budgets mean more targeted marketing to drive traffic to sites.

The key to the next round of dot-com advertising seems to be finding the most effective way to target individual audiences.

In the case of smaller dot-coms that means cutting their coat according to their cloth.