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Broadband and the Acceleration of Internet Advertising
Accountability of this medium is ‘second to none.’
by Hank Berkowitz

(New York, NY October 5, 2004) – Here are some key takeaways I gleaned from a recent breakfast roundtable discussion hosted by PricewaterhouseCoopers and the Software & Information Industry Association in Manhattan. Let me know what you think?

“Technology, audience and culture are three powerful drivers of Internet advertising today,” according to keynote speaker, Douglas W. McCormick, Chairman & CEO, iVillage, Inc.

On the technology side you have broadband penetration throughout the workplace and at roughly 35-percent of U.S. households. Broadband connectivity, said McCormick, “is the big thing driving the Net today. Broadband’s importance to the Internet is what cable hookups were to cable operators in the early 80s.”

According to PWC findings, the average broadband user is spending 12.5 hours per week online and 75-percent of households with incomes over $150,000 a year have broadband connections. Yet Internet advertising today is just 3-percent to 4-percent of the overall advertising pie.

According to McCormick and PWC data, when you have broadband usage up 58-percent in one year, nearly two-thirds of mainstream advertisers (63-percent) said the adoption of broadband connections would encourage them to increase their advertising spend in the year ahead.

Audience Measurement

Biggest thing today is behavioral targeting. Thanks to Internet advertising, you have a highly measurable medium and no longer does the old adage apply that “50-percent of advertising dollars are wasted.”

McCormick outlined three discrete types of advertising via the Web:

1. Display – which is designed to influence audience behavior
2. Direct Response – which encourages immediate buying
3. Search – like the Yellow pages. Respondent already wants to buy, just needs to find out where.

Each form of Web advertising is powerful and highly measurable, but advertisers and their agencies need to assess carefully their objectives before launching a campaign. You can't expect a single campaign to accomplish all three objectives, McCormick noted.

“Accountability of the Internet is second to none. No other medium can match its ‘get what you pay for’ accountability in this Sarbanes ROI era.”

Culture

More and more you’re seeing that buyers, creators and sellers of Internet advertising are those who’ve grown up with the medium, or at least spent much of their working life with this medium. “It’s a lot easier to sell the medium to those who live it and use it. Yong professionals in media today. They grew up with the Net. Went to business school with the Net. It’s already part of their lives. It’s always a lot easier to preach to the converted.”

Vs. Other Media

By 2007, about 20-percent of the country will have TiVo or DVR, noted McCormick. “About 10-percent of all broadcast commercial messages on TV will never get seen. You can bet more and more advertisers are looking elsewhere for their spend and the Internet is a great place to accept those dollars.” The majority of Internet advertising is not going to migrate out of print, so much as migrate out of television and direct mail.