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More Large Companies Are Advertising on Web

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NEW YORK -- More large companies are advertising on the Internet, but they're purchasing ads at a slower rate than the rest of the market, according to research firm Jupiter Media Metrix Inc.

In a report Jupiter plans to release at its annual Online Advertising Forum here Thursday, the firm said the number of Fortune 100 companies advertising online has risen 21% to 81 from 67 last year.

But the number of ad impressions they've bought rose just 14% in the first half of the year, while overall market ad impressions rose 54% in that period. An impression is a measure of each time an ad is viewed. The figures are based on measurements by Jupiter's AdRelevance ad tracking software.

Jupiter analyst Marc Ryan said the report held some positive news for Web site operators, but at the same it illustrated that traditional advertisers aren't yet the white knights who will rescue a slumping online ad market.

"It's good we're seeing an increase in the number of large companies online," Mr. Ryan said. "It doesn't surprise us that they're not moving as fast as the rest of the market."

Many Fortune 100 companies are still testing the waters online, and so they aren't willing to spend huge amounts on Internet advertising yet, Mr.Ryan said. But if Web publishers can demonstrate that these limited ad campaigns have been successful, the traditional advertisers might step up their efforts.

Even as ad impressions rise, actual spending online remains flat, Mr. Ryan said, because advertisers are negotiating lower rates. He didn't have estimates of online spending for the year, but other analysts have estimated spending has fallen 20% so far this year. Jupiter (JMXI) is predicting advertising spending will rise 5% this year compared with last year.

The trend of declining ad spending despite rising impressions has been bad news for Web publishers like Yahoo Inc. (YHOO), which has posted falling sales and profits this year.

The financial services and technology sectors of the Fortune 100 purchased the most online ad impressions in the first half of the year, Jupiter said. The top five Fortune 100 advertisers on the Internet were: Citigroup Inc. (C), J.P. Morgan Chase&Co. (JPM), Dell Computer Corp. (DELL), AT&T Corp. (T) and Wal-Mart Stores Inc. (WMT).

One important caveat about the Jupiter study is that it doesn't fully include media powerhouse AOL Time Warner Inc. (AOL). Despite its large size, AOL Time Warner isn't in the current Fortune 100 because the list was compiled before the January merger of America Online and Time Warner, said Jupiter spokesman Steve Sachs.

If AOL Time Warner were included among the Fortune 100 advertisers, it would have boosted the group's online ad impression growth to 19% from 14% for the first half of 2001, Jupiter said. Much of AOL Time Warner's advertising is conducted on its own online properties.

In addition, Jupiter's AdRelevance software doesn't measure advertising on the AOL flagship online service, which is a closed, proprietary system, but accounts for a huge chunk of online advertising activity. AdRelevance only measures advertising on the open Internet.

As a result, even though AOL is one of the biggest recipients of online ad revenue, it wasn't fully represented among the top online publishers receiving Fortune 100 advertising. Jupiter said the top five were, in order: Yahoo, Microsoft Corp.'s (MSFT) MSN network, Excite@Home Corp. (ATHM), IWon and AOL's Netscape portal, which is a Web-based property.
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