Setting sites on Net ad gains

Not long ago, one of our directors came storming into my office in a rage.

Not long ago, one of our directors came storming into my office in a rage. Clearly, something terrible had happened. Actually, he was furious that a link from our Internet site to his favourite weather site had disappeared, and I was to blame. It turned out that before every trip abroad he would check the weather forecast for his destination from the site. The Internet was suddenly important to him, providing him with valuable information that he can’t get from any other source. This anecdote helps to explain the extraordinary growth in Internet use all around the world – the majority of users are connecting to get low-cost access to information about their particular interests or activities.

However, despite its rapid growth rate, the Internet is capturing a ridiculously disproportionate amount of media coverage and business attention relative to its present size and commercial value.

We currently forecast that advertising on the Internet will account for only 0.8 per cent of worldwide advertising expenditure by 2000, up from just 0.1 per cent last year. It hardly seems worthy of much attention yet the Internet is on a long honeymoon and interest in it continues to rise. It is confounding the sceptics, refusing to go away.

Despite widespread dissatisfaction with it, more and more people are getting connected. With over 5 million sites to choose from, it is hardly surprising corporate Websites typically attract only a trickle of users, yet more and more companies are creating and maintaining expensive sites. Many users complain the Internet is slow, boring and expensive to use, yet a growing number are addicted to it. The Internet, it seems, it still the next big thing; it is getting on with climbing the fastest growth curve of any medium.

Five years ago there were less than 100,000 Internet users in the UK. Today there are about 5 million users – 11 per cent of the adult population. There is little sign of a slowdown in the rate of growth. So, who are these Internet users, where are they connected, what are they using the Internet for and how is their behaviour changing over time?

BMRB’s Internet Monitor is a rich source of continuous information on the subject. From it we find that Internet users come from an increasingly broad spectrum of the population. Two-thirds of current Internet users are male, 31 per cent of users are under 24, 48 per cent are aged between 25 and 44, and 21 per cent are over 45-years-old (six per cent over 55). Three-quarters of users are ABC1s and half live in the middle or north of the country. The perception of Internet users as “techies” is steadily being eroded.

The survey also shows that work and home users are almost the same in number, but with little overlap between the two. Forty-five per cent of Internet users access at work, 41 per cent at home, 37 per cent at school or college, 19 per cent at someone else’s home. The remaining small amount of access originates in cyber cafés, hotels and libraries.

While there’s quite high overlap between academic and home users, surprisingly only ten per cent of users access the Internet at work as well as at home. Home users are slightly more downmarket than work users and their demographic profile also skews more towards 15 to 19-year-olds and, unsurprisingly, to the over-55s.

BMRB’s most recent survey shows that only a quarter of home and work users go online every day, about 40 per cent are connecting most days, and roughly two-thirds connect at least twice a week.

Academic use is much lighter, with only 42 per cent of users connecting two or more times a week.

There are two key reasons why people connect to the Internet: firstly, to get information about a particular activity or interest and secondly to send and receive e-mail. To the great majority of users the Internet is an information and communication medium, not an entertainment medium. So, what are advertisers to make of it?

Finding the answer is an ongoing struggle for most. On one hand, here is a medium that is growing at a phenomenal rate, with 11 per cent of UK adults online, with global reach and with unique potential for personalised customer communication and online transactions.

In the US, millions of dollars are already being spent by online consumers who are buying computer hardware and software (Dell’s business has been transformed), flights, holidays, books and CDs. However, on the other hand, every company site has to compete with several million others to attract visitors, and many receive only a trickle of users.

While most UK advertisers have sites, very few are actually generating sales or customer leads. For many, Internet hype has led to inflated expectations and harsh realities. There are only a few sites that are able to attract large numbers of users.

There are several reasons why serious investment in the Internet remains highly risky for advertisers. First, there is a huge excess of supply over demand, with thousands of new sites being created daily, all vying for the user’s attention. Then there is the rapidly changing technology of the Internet, which makes sites created six months ago look out-of-date. Thirdly, there is the time and money needed to maintain sites. In this environment most advertisers have opted to take a low-risk approach, creating small-scale low maintenance sites.

The use of the Internet as an advertising medium is also a moot subject. The Internet remains a largely unmeasured and unaccountable advertising medium in the UK. This is reflected in the low level of advertising money (unmeasured) spent in the medium – about 6m last year and an estimated 15m this year.

Only a small percentage of advertisers with corporate or brand sites have set aside online advertising budgets. Many media owners’ sites fail to provide accurate audience size statistics, it is generally not possible to target advertising against even the most basic demographic criteria, and site selection typically has to be based on site publishers own audience figures. Although site auditing is available, only a handful of sites have so far been audited. Advertiser concern is understandable. For most the Internet is simply not yet ready for large-scale investment, either in site development or as an advertising vehicle.

However, the present is no guide to the future. The Internet is no exception to the growing pangs that all new media, particularly those based on technology, must go through. It is likely that most advertisers will eventually find the right formula for success on the Internet- sooner than the cynics think, and later than the hype would have us believe.


    Leave a comment