Media firms dominate online ads

Three industry sectors have emerged as dominating all display advertising online, with media companies leading the charge into 2006.

Such is the verdict of a new report covering all UK media spend for 2005 from Thomson Intermedia, the media analyst and KMPG, the consultants.

Charged by the phenomenal rise in online betting, the report found entertainment media and leisure companies took the lion’s share of online advertising, achieving 26 per cent of all Web-based ads.

BSkyB ranked as the no.1 internet advertiser during the final quarter of 2005, followed by its sector bedfellows, UK Betting and Oddschecker.

IT and Communications firms continued their marketing assault online, with giants like O2, AOL and BT helping the sector claim 20 per cent of total online (display) ads.

The third biggest advertiser during 2005 was the Finance industry, which lost out to IT & Communications by a marginal one per cent, representing an overall gradual decline for the sector.

Elsewhere online, the report found retailers spent just 13 per cent, travel companies nine per cent, car companies four per cent and government and utilities two per cent.

The traditional advertising mediums including TV, Radio, print campaigns and direct mail face significant challenges, as internet advertising continues, “to be going from strength to strength,” Thomson said.

Over the last 12 months, the analyst cited paid-search advertising as continuing apace, but conceded it was the most difficult area to accurately scrutinise.

Such advertising describes the process when an advertiser pays for their name to pop-up when a Web user inserts keywords into a search engine like Google, MSN, or Yahoo!

“Arguably the biggest media story of the year is the continued rapid growth of the internet as an advertising medium,” Sarah Thomson, chief executive of Thomson Intermedia told the FT.

“The internet is a famously accountable medium, in that advertisers can see quickly and precisely the impact of their spend.

“However, it is also an opaque medium: the growth is in search-based ads, which the advertising industry cannot monitor, whilst internet display ad revenues actually seem to have fallen at the end of 2005.

“In the longer term we are very conscious that as this medium continues its explosive growth, there is a lack of marketing spend transparency,” she said.

Subsequently speaking to The Times, the company’s commercial director hinted that the “dark area” of paid-search stems from a reluctance of Google and its rivals to make their data public.

As a result, Graham Chace said some clients are being advised by their ad agency not to invest in areas of paid-search, despite its rapid growth.

Elsewhere in the ad sector, the report found direct mail has now gone into reverse, thanks to the advance of e-mail marketing, consolidation among marketers and the use of targeted door drops.

Thomson added that contrary to fears of an end-of-year slowdown, ad spend in December 2005 was five per cent higher than seen in 2004, while spending overall achieved a year-on-year increase of 5.4 per cent.


13th February 2006

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