In an attempt to survive the dotcom shakeout, online firms are
moving advertising dollars away from relatively expensive advertising
channels, such as television and newspaper, to advertising on the
Internet.
While the trend is slowly emerging in the Asia-Pacific region, dotcoms
in the US have already seen a dramatic change in ad spending.
And, as the once-open bankbooks from venture capitalists steadily close,
the shift to online advertising makes sense, said Mr Forrest Didier,
executive director - North Asia, ACNielsen eRatings.com.
Mr Didier told CreATION that the pressure on dotcoms to generate
revenue, as well as the cost of traditional advertising media was
leading many to reexamine advertising spending.
"Hong Kong and the region is on the brink of this trend ... There are
three main reasons why dotcoms are moving away from traditional
advertising.
"Firstly it is the cost of advertising. And, there is also the pressure
in the Internet stock market for these dotcoms to show
profitability.
"They are under enormous pressure. And, this means they must consider
the cost-effectiveness of their marketing campaigns," he said.
Lycos Asia's general director for Greater China and vice-president for
sales, Mr James Cheng, agreed.
He said a recent decision by Lycos Asia to place advertising on
television was withdrawn, due entirely to cost.
"We were supposed to put on a TV advertisement, but when we considered
the cost and evaluated it, it was too much. So we changed direction.
"Today, dotcoms have to consider their burn rate and it doesn't make
sense to advertise on TV or newspapers anymore.
"That was only effective when all you wanted was attention, regardless
of who the target audience was or whether they went to your site," Mr
Cheng said.
A recent study by AdRelevance reported dotcom advertisers in the US now
outnumber traditional marketers on the Web by two to one.
In July 1999 dotcom advertisers represented 54 per cent of the top 200
online advertisers.
As of June this year, the dotcom contingent made up 68 per cent of
online advertisers.
The report also found dotcom companies were committing a greater
percentage of online ad impressions in the second quarter.
And as the carnage of failing websites continues to rise, both Mr Cheng
and Mr Didier believe the industry will see an increasing number of
Internet-related firms implement rich media for more effective
advertising.
"This is another reason, and an additional trend emerging, where dotcoms
are looking at advertising capabilities," Mr Didier said.
"We are seeing a different type of advertising because of this.
"Disney is already introducing larger, bigger banner ads that allow more
creativity through streaming of various media.
"This presents more capabilities and puts the focus on cost and
demographics so these dotcoms can target the right market."
According to ACNielsen eRatings.com, the region (excluding Japan) is on
the verge of an explosion in online advertising, which is expected to
total more than US$5 billion by 2005.
