Wednesday, May 2, 2001

Certain Firms Increase Online Ad Presence

Jupiter Media Metrix, a global leader in market intelligence, today reports that consumer packaged goods (CPG) firms are increasing their online advertising presence on niche Web sites as they attempt to target consumers more effectively. According to AdRelevance data released at the @d:Tech conference in Los Angeles, CPG firms purchased 55 percent of their online ad impressions on niche Web sites during the first quarter of 2001, compared with 44 percent during the third quarter of 2000. Jupiter analysts say the data indicate that CPG companies are still experimenting with online advertising and favoring sites that feature content that is a more obvious fit with their products.

"Online advertisers have long been looking for better ways to target consumers. The latest AdRelevance AdDemographics data show that CPG companies have been more heavily targeting sites that appeal to specific demographic segments," said Mike May, Jupiter senior analyst. "Additionally, the costs of doing business with these smaller affinity sites are typically lower than they are with portals, and because most CPGs are investing to learn, they're avoiding larger media buys. Small sites are more likely to sign the shorter term deals that CPGs are looking for, while portals try to hold out for deals stretching six to twelve months."

Key findings from the new AdRelevance AdDemographics data, the first Jupiter Media Metrix online advertising tracking product to combine Media Metrix audience measurement and AdRelevance data in the front end, include:

- According to the AdDemographics data, alcohol ads were viewed by males 77 percent of the time during the first quarter of 2001 as alcohol advertisers increased their ad buys on sports and automotive sites that are heavily trafficked by men. Similarly, cosmetic advertisers achieved a 57 percent female demographic by increasing their ad impressions on fashion, personal expression, and children and family sites. Jupiter analysts warn, however, that results gleaned from small sites may not yield the learning CPGs seek—because campaigns that perform well on small sites don't always drive the same results when shifted to larger sites.

- While CPG advertisers have focused a higher percentage of their online ads on niche Web sites, portals have not suffered. According to the data, CPG firms have doubled their online ad impressions since the third quarter of 2000 and have significantly increased the number of impressions they purchase on portal sites. Jupiter analysts say that although CPGs have been successful in targeting specific audiences on niche sites, portal sites still offer the attractive mix of an extensive and diverse user base with audience segmentation among subsites. Jupiter analysts assert that CPGs should not neglect experimenting on portals because they offer more of an opportunity to scale campaigns due to their high level of page views.

- CPG companies are advertising on niche Web sites more than retailers are. While CPG firms have decreased their share of online ads on Web portals since the third quarter in favor of niche Web sites, retail companies consistently purchase almost 50 percent of their impressions on portals and few on niche sites. According to Jupiter analysts, retailers rely on portals because the volume of orders they generate makes it easier for them to forgive the low return on investment (ROI) rates.

"The new AdRelevance AdDemogrpahics feature enables advertisers to measure how effective their targeting efforts have been against specific demographic segments," said Marty Levin, executive vice president, Jupiter Media Metrix. "AdRelevance data has led the industry in powerful insight into when, where and how much companies are advertising online. AdDemographics now gives advertisers the rest of the story—who is viewing the ads."

Consumers Indifferent to Online Sales Tax!
Jupiter Media Metrix today reports that while the October 2001 expiration of the Internet Tax Freedom Act of 1998 will eventually lead to the demise of the Internet's tax-free status, the anticipated sales tax on all online purchases will not alter consumers' purchasing habits. According to a Jupiter Consumer survey of U.S. online buyers that have abandoned a purchase in the past, 74 percent do not choose one online retailer over another to avoid sales tax for purchases under $50.

Under current legislation, state and local governments risk losing up to $7.7 billion in lost tax revenues from online sales in 2005, according to Jupiter analysts. This loss represents seven percent of total sales tax revenue.

"Many brick-and-mortar retail companies launched separate online businesses in order to compete with nimble Internet-only retailers sheltered under the Internet Tax Freedom Act," said Heather Dougherty, Jupiter analyst. "But times have changed: the Tax Freedom Act, which intended to protect nascent Internet companies and stimulate e-commerce, is set to expire; the threat of Internet-only retailers now is miniscule; and state and local governments are feeling the sting of lost tax dollars. With the end of the tax-free Internet approaching, retailers must merge their online and offline tax-calculation and -collection capabilities, as well as integrate their Web and in-store functions to streamline customer service and overall business operations."

Supporting Consumer Online Retail Data:

- According to a March 2001 Jupiter Consumer Survey of U.S. online buyers that have abandoned a purchase: only 21 percent abandoned one retailer over another to avoid paying sales tax for purchases under $50.

- Underscoring the negligible impact sales taxes have had on shopping over the Internet, Media Metrix ratings data show that six of the top ten retail Web sites according to unique visitors in March 2001 are multi-channel retailers that are already required to collect tax in certain markets. The top three multi-channel retailers along with the number of unique visitors in March 2001: Barnesandnoble.com with 4.9 million; Apple.com with 4.03 million; and HP.com with 4.02 million.

- Five Internet-only retailers ranked among Media Metrix' top-ten retail sites in March 2000, including: Amazon.com, CDNow.com, Enews.com, Iprint.com and Buy.com. In March 2001, only four Internet-only retailers ranked among the top ten retail sites: Amazon.com, with 18.2 million unique visitors; X10.com, with 8.4 million unique visitors; CDNow.com with 4.7 million unique visitors; and MagazineOutlet.com 3.9 million unique visitors.