Internet Advertising SEO Soars to 12 Billion for 2005
By
Joel Leyden Jerusalem---December 4.....Ten years ago, when a select few of us marketing pros were just starting to create Websites, we had to give them away. We were not even sure that the e-mail addresses that we were using would not be obsolete by 1996. The Internet was a media pros new toy. But how long it would last was anyone's guess. No one I knew outside of NetKing's staff, Israel's first commercial Website, had this thing called "e-mail". Not my friends. Not my relatives. Not even our competition. Then again, back in 1995 we had no competition. Today, Internet advertising is in everyone's face with over 12 billion dollars expected to be spent this year in the States alone. Almost half, 42 percent, of America's population now has the Internet. The money on this digital channel is now beginning to move away from the early explorers of the Net - those who created billion dollar on-line empires in adult entertainment and on-line casinos to traditional advertising agencies. But
the move has been a slow and painful one. Last week I visited the largest advertising
agency in Israel. My marketing instinct told me that this was going to be a total waste of time. That these guys were busy creating banner ads and Websites, but would know nothing, nor appreciate SEO or search engine optimization. I was correct. They looked at SEO as a minor player. A "white pages" for the Internet. I
thought to myself "how primitive can these people be, how blind?" You don't find Internet advertising without SEO. Without performing a search for MP3 music, sex, news, the latest trading prices for crude oil, dating, jobs, maps, video games, al-Qaida or even what Britney Spears ate for breakfast without a search on Google. You might as well stare at the birds outside. Hold onto to that last thought about the birds. Yes, as a public service announcement, the INA suggests that you now look away from your monitor and peer out your window seeking birds for the next 60 seconds. This will save you loss of eyesight. Now back to the program! Last week the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) announced that Internet advertising revenues totaled a record 3.1 billion USD for the third quarter of 2005, making this the highest quarter reported and the first time that quarterly revenues surpassed $3 billion. This new media research stated that 2005 third-quarter revenues represented a 33.9 percent increase over 2004 third-quarter total of $2.3 billion and a 4.7percent increase over the 2005 second-quarter total of $2.9 billion. The advertising stampede away from TV advertising to Internet advertising is a reality. It's the Gold Rush of 2005. That's been recognized by many companies, including Procter & Gamble, the giant consumer goods company and the US second-largest advertiser with a $2.5 billion budget. When P&G announced last year that it would cut back on its TV ad spending, it sent tremors through the industry. As promised, the producers of Crest, Pampers and Clairol, among dozens of other brands, lowered its national broadcast spending during the first six months of 2005 to $321 million, a 20 percent drop compared to the same period in 2004, reported TNS Media Intelligence. Equally reflective of broad changes in advertising, P&G's Internet spending soared 55 percent to $8.6 million. Like any smart marketer, P&G is following the eyeballs. As of September, Nielsen/NetRatings reported that the total number of high-speed Internet users in the country had climbed to 120 million, roughly 42 percent of the population, a 34 percent increase from a year ago. (The number of dial-up users totaled 54 million.) Based on historical data, the annual revenue run rate for 2005 will easily exceed $12 billion, well above last year’s record total of $9.6 billion. ”More and more marketers have embraced Interactive as an essential medium to reach and engage their consumers in more immersive brand experiences,” said Greg Stuart, President and CEO, IAB. “Moreover, Interactive advertising continues to prove itself as the most cost effective medium in driving sales and changing consumer attitudes providing a powerful competitive edge for these marketers.” "The continued strength in Internet advertising reflects in part the medium's unique ability to collapse the business cycle for advertising, marketing and branding, making it more attractive for traditional advertisers," said Pete Petrusky, Director, Advisory Services, PricewaterhouseCoopers. "The high percentage growth in revenues is more significant given the larger revenue base." David Silverman, Partner, Assurance Services, PricewaterhouseCoopers, adds, “The third quarter figures are the most impressive we’ve seen yet. Clearly advertisers are realizing the benefits of shifting more of their total advertising budgets to online – it is an exciting prospect that the annual run rate may exceed $12 billion.” The IAB sponsors the Internet Advertising Revenue Report, which is conducted independently by the New Media Group of PricewaterhouseCoopers. The full Internet advertising research report is issued twice yearly for full and half-year data, and top-line quarterly estimates are issued for the first and third quarters. Now there is a rumor that the 30-second TV commercial is dying. It is being replaced by a 10 second Internet advertising MPEG or on-line movie. News like this can send TV executives like Viacom Inc.'s Leslie Moonves into a frenzy. Asked at a New York investor conference whether there is a shift under way in how corporate advertisers view prime time TV, Moonves turned from analytical to annoyed. "There's a game that goes on in this business," said the former president of CBS. "Every year, the advertising agencies say the marketplace is horrible, it's way down, and every year we've been up for 10 solid years." That may be true for CBS' prime-time programming, but it's not true across the broadcast networks. For most, US network TV advertising is flat or falling. In June, NBC was forced to acknowledge that its lack of a hit show translated into a $900 million decrease in advertising sales. As Internet advertising secures a larger share of marketing budgets and ad agencies tailor spots to the Internet where attention spans can be measured in split seconds, television networks will have to adjust, executives told the Reuters Media and Advertising Summit this week. "We believe the Web site will ultimately replace the 30-second commercial as the central expression of the brand ... The TV commercial over time will become more of a way to simply send people to your Web site," said a professional Internet SEO. A main driver of that change will be online advertising which should see its share of spending roughly double from about 8 percent now, as companies pay more attention to the Web's ability to tailor messages to individual consumers and to track response. Web video advertisements will be about 10 seconds long, and mobile advertising on cell phones and other devices would be a similar length. "Advertising money is going to go to the medium that best delivers a relevant message, and in turn can demonstrate that it's the engine behind increased revenues," said Matt Freeman, CEO of Tribal DDB Worldwide, the interactive division arm of the advertising giant Omnicom Group. But do the
traditional advertising agencies really get it? Do they truly understand how Internet
advertising works? Whether in the office or at home, you are wired. Your Google search and the SEO marketing professional which brings you all that you need, including a Dominoes Pizza and a Coke. Talking about pizza let's lend tribute to Pizza Hut which was on-line delivering pizzas in 1995. So as you read this story please be assured that many CEO's of the world's leading advertising agencies are now sending out memos to staff with the subject reading: reallocate all advertising budgets for 2006, use SEO, banners and cookies." Yes that almighty cookie which was not produced by Nabisco and named an Oreo, but rather a small software tracking program which is placed on your computer by the Chicago Tribune and hundreds of thousands of other Internet sites. Why do I mention the Chicago Tribune? If you perform a search right now for the keywords Internet advertising in Google News the first ranked story will be emanating from the Tribune, unless of course you get this INA story in it's place. Now after reading the Tribune story surf the Net and then go back to the Tribune news piece on Internet advertising. Ah, you can't get in this time without providing them with your e-mail address. Yes, the Chicago Tribune as many other newspapers are now becoming much more efficient at tracking their circulation on the Net in contrast to their print edition or relying upon Nielsen / NetRatings. Want to read the Chicago Tribune story without sacrificing your privacy, just delete the cookies in your computer. Don't touch the Oreos. Google.com captured a staggering $1.56 bil. in Internet advertising for the three months ended Sept. 30. That rivals the $1.65 bil. in aggregate ad revenue and channel carriage fees in the same time frame for Viacom's 25 basic cable networks, which include MTV and BET. Because of media convergence, Broadband Advertising uses an expansive definition of broadband, as Websites and basic cable networks increasingly compete for the same advertiser budgets. The top eight Internet companies achieved a rip-roaring 61.6% growth rate in the third quarter (compared to a year earlier), while basic cable's 16.6% growth rate pales in comparison. Yet basic cable increases are not shabby because basic cable is one of the fastest growing of traditional media sectors. For example, total ad revenue at the Big Four broadcast TV networks is forecast to fall 2.3% this year. "Internet advertising is the hot ticket in the future," says Erik Brannon, research associate at Kagan Research. "Just to put this soaring growth in perspective, Google generated $4.2 bil. in revenue for the first nine months of 2005, which surpasses its full-year total of $3.2 bil. for 2004." When will the conventional advertising agencies - Dentsu, Hakuhodo, McCann Erickson Worldwide, Ogilvy & Mather, BBDO Worldwide, Grey Advertising, JWT, Saatchi & Saatchi, DDB Worldwide, Euro RSCG, Publicis Worldwide, Foote, Cone & Belding, TBWA Worldwide, Y&R Advertising, Leo Burnett, Lowe Worldwide realize the value of Internet advertising? Their tuna sandwiches will turn to sweet, Maine lobsters when they finally listen to the young computer programmer they hired to design Internet ad banners and on-line videos say: Internet advertising begins with SEO.
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