IQ News: Banner Biorhythms

To every medium, there is a season. Or is there? Fourth quarter is a bear in the media business. It's when advertisers make their final end-run to lure consumers into stores to meet year-end sales goals. When buyers and sellers of media dig in to hash out deals over the last eyeballs and the last dollars. When work days get longer and longer. At Modem Media, one of the busiest centers of online media buying, staffers were frantically churning out orders for online schedules for clients such as AT&T and Delta as 1997 came to a close. "I'd been promising my folks all during November and December: 'Don't worry, you're going to catch your breath come January. Things are going to slow down; they always do,'" says John Nardone, media director at Modem. "Always" is a big word for new media, which for advertisers primarily means the World Wide Web, a five-year-old phenomenon. In more established media, where such ebbs and flows of marketing money are commonly referred to as 'seasonality,' cycles can generally be counted on, year in and year out. Now, in new media circles, 'seasonality' has become a favorite explanation for executives looking for a way to make sense of recent dips in advertiser spending online. At latest count by Big Six accounting firm Coopers & Lybrand (which has been auditing Web publishers at the behest of the Internet Advertising Bureau for a little more than a year), advertisers spent some $227 million online in the third quarter of last year. Though a smallish figure compared to other media, it was a 67 percent increase over the previous year. What troubled new media executives was the fact that, for the first time, the increase over the previous quarter was in the single digits--a mere 6 percent--by far the lowest increase in the Web's "adult" life. Until then, quarterly reports had shown nothing but a continual upturn. From 1995 to 1996, online spending by advertisers increased a whopping 388 percent, according to industry analysts Jupiter Communications. The Coopers reports show high double-digits dotting the flowering new media landscape: 73 percent more spending in the second quarter of 1996 than the first quarter; 46 percent more spent in the third quarter than in the second. But the first quarter of 1997 sparked a near panic. To the eyes of jaded new media sellers, who had grown accustomed to expanding budgets, an 18 percent improvement over fourth quarter 1996 seemed like no growth at all. Was the party over? Not according to Craig Gugel, vice president, chief research and media services officer at Organic Online, and a former media research executive at Bates USA. The Internet is "following traditional patterns of retailing," he says. According to his thinking, advertisers pushing products around the holidays increase their budgets, as they do across the board in the traditional media. Furthermore, Gugel argues that online spending should naturally follow traditional media if the same media planner is laying out plans based on a client's objectives for the year. "It has to dovetail and coincide with other media," he says. Web advertising isn't necessarily being bought and sold like other media, however, and clients' objectives for online initiatives sometimes don't follow their offline endeavors. "It's a bit too early to tell whether there's seasonality or not," observes Rex Briggs, who, as vice president of San Francisco-based Millward Brown Interactive, brings a heavy research perspective. "It probably has more to do with the fact that we're still talking about a relatively small pool of advertisers not spending a whole lot." In Briggs' view, the slight shifts in the budget of an advertiser like Microsoft, whose banners represented a majority of online marketing early on, might throw the entire industry. According to the latest Coopers report, the interactive advertising field is diversifying, which may help boost the numbers into more predictable patterns. For the first time, consumer goods ads made up the biggest category of online spending at 32 percent, followed by technology advertisers, the biggest spenders until now. Many of the online advertisers also prove to be those selling space to other advertisers, creating an incestuous environment that's difficult to accurately track. Since ad-supported Web sites use advertising to drive traffic to their sites (so they can then sell ads to others), momentum is created--but is anyone making money? And, as more advertisers build electronic commerce into their sites, this blur of advertising activity will only increase. It's been suggested that seasonality's impact can be felt at the other end of the wire, as well. In a controversial study released two years ago, America Online claimed that during summer months, when television viewing typically dwindles, online usage spikes. Other publishers have reported traffic increases after the holidays, when consumers get new computers and modems and go online for the first time. Modem's Nardone admits there may be some predictability to advertisers' online spending from one year to the next, but his vision of the cycle is more like this: a burst in the early part of January to catch the computer newcomers, followed by significant spending on Web site enhancements with funds that weren't available at the end of the previous year. Next, online media dollars get their due, and increase over each quarter, until they "hit fever pitch" in third quarter. Holiday spending is a given. "That being said, we're having an unusually insane first quarter of the year," he says. Modem staffers just can't get a break. And neither, it seems, can Web-spending theorists, who will continue to seek some explanation for the peaks and valleys that sometimes parallel traditional media--and sometimes don't. Either way, it's likely time will bring about a more predictable marketplace and with it, more spending across the board.

Brand Marketing

IQ News: Banner Biorhythms

Laura Rich

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Laura Rich