Stuck in Test Mode

The technology-ruled interactive marketing movement is in a state of hyperactive growth. Every time one looks at it is not only larger but has changed its aspect, like Cyrano’s nose. Although hard totals are hard to come by for this evolving sector – which includes Internet efforts and interactive telephone promotions – modest growth on the order of 10 percent left spending shy of the billion-dollar mark in 1997.

Many ad campaigns have increasingly incorporated promotions that enabled marketers to capture the names of shoppers and contest participants for databases in exchange for prizes or gifts, helping to power up numbers. For example, in the first quarter of 1998, the percent of U.S. companies on the Web increased from 38 percent to 69 percent, according to the Association of National Advertisers. Average annual expenditures for online advertising rose steeply from $251 million in 1996 to $714 last year – a huge increase, but still only a fraction of total national advertising spending.

A relatively large percentage (38 percent) of online media is being purchased directly by corporations – in-house media and advertising departments funded by brand marketing budgets.

In terms of format, while virtually all respondents use banners, there has been a significant increase in “beyond the banner” formats including sponsorships (62 percent), jump pages (37 percent), interstitial pages (34 percent), mini-sites (42 percent), and push (e-mail) advertising (16 percent.)

Data released inWeb Advertising Report, published by PROMO’s sister company Intertec/Simba information, notes that marketing for last year was $597.1 million, up from $236.4 million in 1996. That number comprised both World Wide Web and consumer on-line services, according to Intertec/Simba report author Matt Kinsman.

In all, there are about 40 million consumer and business promoters on the Web, with new users swarming in like summer bugs to a porch light. For example, in 1998 there will be 2.44 billion estimated user sessions (individual people going online), up from 1.86 billion last year. In 1998, Kinsman says there will be 19.52 billion page views (individual content pages viewed in a single sitting) as opposed to 14.87 billion such page views last year.

Why do they keep coming? Because Internet promos allow for a dialogue-intensive marketing environment. Web surfers respond directly to messages from marketers, making for interaction on an individual basis and allowing greater opportunity for identifying targets, increasing product usage, or solving customer problems. The Internet, it’s no secret, is the potential Promised Land of the one-to-one marketing set.

Gotta Have It Apparel was the fastest-growing online marketing segment in 1997, with Levi Strauss and L.L. Bean Catalogs “coming on really strong,” according to Kinsman. Automotive advertisers have been on the Web since the beginning and still remain among the largest spenders.

Package goods marketers continue to search for their place on the net. While many big players, including Procter & Gamble, General Mills, Kraft Foods, and Kellogg have significant presences online, “others have entirely ignored it,” says Kinsman.

The Internet made progress in its transformation into a mass medium. Only a few years ago, the heavy-hitters online tended to be high-tech companies, but over the past year marketers of mass consumer brands have begun to outnumber business-to-business Web promoters by a large margin. The big money, however, still emanates from companies like Hewlett Packard, Digital, and Microsoft.

Questions about the Web’s security still persist. For example, if online couponing is cheaper, quicker, and more targeted than FSIs, why isn’t there more use of the Internet by the coupon sector? Fear of fraud is a chief reason, according to Catalina Marketing Corp. executive vp of marketing David Diamond. “Too many retailers and package goods sellers are allowing concerns with coupon fraud to overwhelm the opportunity,” he says.

While in the past it was easy to take a 50-cent online coupon – which consumers generally print out on home computer systems – and turn it into a $5 coupon, many suppliers, like Catalina’s Supermarkets Online, have developed systems to forestall fraud. “But retailers are still very resistant,” Diamond says.

“The Web is a new medium. It isn’t proven at this point,” notes Kinsman. “Retailers at first thought they would get terrific returns and they haven’t. And that’s part of the problem. There’s no way to measure success on the Web at this point.”

* Total spending growth for last year was approximately 10 percent, falling short of $1 billion mark.

* Number of online advertisers shot from 39 percent to 69 percent of all U.S. companies.

* Average annual expenditures for online advertising rose from $251,000 in 1996 to $714,00 last year.

* There are about 40 million consumer and business promotions on the Web.

* Apparel was the fastest-growing segment marketing on the Internet in 1997.

* Mass consumer advertisers have begun to outnumber business-to-business advertisers.