Ads Focus on E-Commerce, Not BrandingAdvertising on the Internet is narrowly focused on e-commerce and not on building strong offline brands, a new study by the Strategis Group revealed.
Computer products, books and credit cards were the three key e-commerce categories that spent the most on online advertising, according to the Strategis Net Presence Survey, which tracked 6,972 ads on the top 50 Web sites.
"The focus of Internet advertising on e-commerce is primarily a function of the infancy of the medium," said Jeffrey Moore, Internet consultant at Strategis. "Audio and video are important components of successful image campaigns, and the bandwidth just isn't adequate in 1999 to support such advertising. Targeting is not yet as precise as it needs to be. When targeting software and techniques get more precise, it'll be much more cost effective to target narrow but appropriate audiences, such as young, active people for sports drinks."
Amazon.com, barnesandnoble.com, Microsoft Corp., NextCard Visa and CDNow, in that order, took the top spots in Strategis' study of the Internet's most visible advertisers.
Other marketers who made the Strategis Net Presence 15 list respectively were financial services company First USA for credit cards, 1-800-Flowers.com, online auctioneer eBay.com, magazine subscription services provider Enews.com, Network Solutions, travel site Lowestfare.com, computer retailer Onsale.com, Visa, Sun Microsystems and General Motors Corp.
To accomplish the survey, which is part of Strategis' larger Advertising on the Internet: 1999 study, the Washington, DC, market researcher logged each tracked ad into a database based on its visibility to calculate the Internet presence of more than 700 leading advertisers in 30 categories. Net presence is a composite measure of online advertising visibility.
In another interesting finding, ads from 13 of the Fortune 25 companies were missing from the leading 50 Web sites. The absentees included such big traditional advertisers like Pepsi Cola, Coca-Cola's Coke Classic, Nabisco, Nike and Wal-Mart.
"The largest American corporations are, to some extent, set in their ways and are not moving as quickly as the new online players," Moore said. "Often, their marketing experts have a wealth of knowledge about television and print advertising, but are not as well-versed on Internet advertising techniques."
But Moore pointed to exceptions like General Motors, which has already made the Strategis Net Presence 15 list and may become even more visible with the recent launch of its e-GM unit.
Brand recall of online ads, however, was poor. A Strategis consumer advertising survey of 403 Internet users had alarming findings. Fifty-two percent of this profile had not clicked on any ad in the past week, and 40 percent of those who had could not remember any online ad.
"Well-educated and higher income users tend to click on Internet ads less often," Moore said.
Sixty-one percent of users with a college degree in the Strategis survey claim not to click on any online ad in an average week, compared to only 42 percent of those who do not have a college degree. Likewise, low-income users are more prone to click on ads than high-income users.
Educated users seem to have a higher recall of specific Internet ads and also display a higher degree of skepticism and a more business like approach to the Internet.
"Advertisers targeting educated and high-income users should consider other forms of Internet advertising, such as opt-in e-mail," Moore said. "Our research suggests that giveaways and sweepstakes are less effective among these strata, but that targeting them with relevant information on products of interest is likely to succeed."
Advertisers need to keep abreast with the latest trends and respond accordingly, he said. Strategis research indicates that younger women have a tremendous interest in shopping for clothes online. Yet, online apparel advertising is scant. Then there are companies keen on building brands using rich media who need to understand the techniques required to undertake such interactive advertising.
The Strategis Group estimates that 12 million U.S. households will have high-speed access to the Internet by 2003, Moore said, "so the nature of online advertising will begin to change very soon."