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E-News: Tech, Financial Services Fuel Online Ad Growth
Rebound in financial markets, PC hardware and software bodes well for B2B media.
from AICPA Custom Media Solutions

Advertising in e-mail newsletters and on Web sites were most frequently cited as the fastest growing revenue areas in 2005 for B2B publishing execs. The just-released Folio magazine survey of nearly 1,000 trade magazine CEOs found that more than one-third (35%) of respondents in the Folio said the e-newsletter/Web advertising category was their fastest growing category in 2005 and expected it to remain so in 2006.

While online advertising accounts for less than 10 percent of overall B2B media company revenue, on average, it is the fastest growing and most talked about new revenue stream. The resurgence of ad spending by technology vendors, and the recent rally in U.S. financial markets has bolstered two traditionally strong B2B ad categories.

The "computing products" advertising category has been stagnant in recent years as PCs sales flattened. As a share of total online spending, computing products drifted downward, from 20 percent of all online advertising in 2003 to just 15 percent in 2005. But this year, with several new products coming to market, that is all about to change, according to several market research organizations including eMarketer, Inc. and Jupiter Research.

On the tech side this year, after a two-year hiatus on major announcements, several new products are coming to market and online advertising will once again be a major component of technology marketers' campaigns. In addition, as hardware and software companies partner with Internet publishers and content providers to enter new markets and reach consumers in new ways, convergence of the two industries is well underway, heralding more new products and opportunities.

Computing Products Share of Total Online Ad Spending

Publishers anticipate that traditional brand marketers will substantially increase their Web advertising this year, according to a new study by AOL's Advertising.com. "While Web-based direct-response advertisers are expected to represent the majority of online revenue, publishers are predicting increased spending from traditional, brand-focused advertisers," stated the report, 2006 Interactive Publisher Survey. The study was based on a January survey of online publishers in Advertising.com's network.

The respondents predicted that about 32 percent of revenue this year would come from offline companies — up from 26.5 percent last year and 22 percent in 2004. Spending is expected to increase across a variety of categories, including retail, consumer packaged goods, entertainment and automotive.

Financial services providers continue ad spending surge

Meanwhile, financial services companies increased their commitment to online ad spending last month — purchasing 30 percent of all display impressions, according to Nielsen/NetRatings AdRelevance. A year ago, financial services marketers were responsible for just 20 percent of display ads online; last month, they purchased 28 percent of display ads. Telecom marketers also upped their online ad spending year-over-year — accounting for 17 percent of impressions last month, up from 12 percent last year. The third-largest category of advertisers — retail goods and services marketers — purchased 15 percent of impressions in April, up from 14 percent in April of 2005.

Meanwhile, a Questex Media Group survey of 767 B2B marketing executives confirmed that lead generation and finding new customers are their top priorities. While trade shows and conferences were most frequently cited as their top priorities, new media opportunities are quickly gaining ground in many markets. When asked in which marketing channels they planned to increase their investment in 2006, 47 percent of the Questex survey respondents cited online advertising and 44 percent said they plan to increase spending on e-mail marketing. No other medium was even close.

Report shows marketers stick with proven interactive media

Mobile, RSS and adver-gaming may get lots of media attention, but many marketers are looking the other way. A new Forrester Research report shows that a wide spectrum of interactive marketers is continuing to bank on proven methods such as e-mail and search, and experiment with rich media and new forms of targeting. Yet most are hesitant to try RSS, blogs, social networking, mobile and in-game ads.

"We certainly found the channels that seemed to get the most curiosity — are not necessarily the ones that marketers are willing to experiment with," concluded Forrester senior analyst Shar VanBoskirk, author of the recent "Interactive Marketing Channels to Watch in 2006" report. The study looks at media plans and usage of 259 marketers from industries including Financial Services, Retail, Media and Communications, Consumer Products, Travel and Leisure, as well as Business Equipment, Technology and Services.

E-mail, search marketing and behavioral targeting came out on top as the channels most marketers either use currently or anticipate using. Ninety-three percent of surveyed marketers use or plan to use e-mail in their marketing efforts, 80 percent use or plan to use search, and 73 percent employ or plan on employing behavioral targeting. Contextual targeting comes in at 69 percent, while 67 percent said they use or expect to use rich media e-mail or rich media display ads

Though they may be the subject of many a news story, emerging media channels fared worse in the minds of marketers. Just over 50 percent use or plan to use blogs or social networks, 47 percent use or plan to use RSS, 43 percent go or have gone mobile, and 28 percent are doing or plan on doing advergaming or in-game ads. Forty-two percent of participants described their companies as aggressive when it comes to investing in marketing technology, while 58 did not.

Blogs and social networking, suggested VanBoskirk, are often portrayed as potentially "disruptive" to companies. So, compared to other newer channels, marketers are more apt to use these media, in part because they feel they have to in order to counteract negative publicity from blogs or other consumer-generated media and social networking sites.

One marketer was quoted as follows: "The intention to test new media is good, but it means a budget tradeoff. Do you spend money testing something new or go with what you know works? It's a big mistake to move into multiple interactive channels without having a clear Internet strategy first."

How can marketers best analyze new media channels? The report recommends they "create a channel innovation team." It suggests they start by learning more about different forms of online ad targeting which "improves the cost-efficiency of existing online advertising efforts by helping to identify more, lower-priced inventory." And, although the report suggests marketers monitor online buzz and slowly test blogs, RSS and other emerging media, it directs marketers to "Let RSS, blogs and podcasting simmer on the back burner."

As always, we’ll keep you posted. As mentioned in today’s lead story, we’re committed to changing the wheels on the bus as it rolls down the highway — as long as it’s rolling in the right direction.