ANA Web Site and Internet Advertising Survey.

The Association of National Advertisers, Inc. (ANA) just released its fifth annual Web site and Internet advertising survey indicating that major companies continued to expand their Web marketing efforts, increasing their average number of Web sites to 9.7, from 6.1 sites last year. They spent an average of $665,000 to develop a site (up 24%) and $691,000 to maintain it (up 17%). Developing/improving brand loyalty was the primary goal for Web marketing among half the respondents, a 10-point increase over last year. The study, which was fielded in April-June 2001, covers spending and marketing activities in 2000.

The vast majority of respondents (79%) said they advertised online in 2000, up from nearly two-thirds in the prior year, and they spent an average of $2.4 million each, up 24%. Interestingly, online advertising accounted for 2.9% of total ad spending – exactly the same percentage as the prior year – indicating that the spending increases were due to the fact that whole advertising pie grew in 2000.

However, only 41% of respondents expected to see an increase in Internet ad spending in 2001 – a marked decrease from the level of optimism expressed the prior year – and that was before the terrorist attack and the extent of the economic slowdown were known.

“As the use of Web sites, extranets and intranets matures, we see increased emphasis on them as brand building and communications tools,” noted Barbara Bacci Mirque, ANA Senior Vice President, who fielded the surveys. “The biggest concerns among advertisers are how to measure Web site performance, audiences for Internet advertising, and, of course, budget constraints.”

Methodology

For this study, the ANA fielded two separate surveys among its members – one on Web site management and the other on Internet advertising – which produced a total of 136 responses from 93 different companies. For the first time this year, the surveys were fielded online.

Mixed Results for e-Commerce

A higher percentage of companies (52%) now sell products or services online, up 8 points versus last year. However, online sales accounted for only 2.4% of respondents’ total revenue, down from 4.7% reported last year.

Of those not currently selling online, just over half (52%) say will probably never sell online, a 19 point increase from last year.

Another 45% say they do plan to sell online sometime in the future, down from 50% last year.

More than one-third (37%) reported that they differentiate online and offline pricing (up 16 points from last year).

Use of Extranets and Intranets Increased

Companies are using online communications to help reach their employees, partners, advertising agencies, distributors and key customers.

More than two-thirds (69%) have extranets, a 15-point increase over last year, which they use to connect to their field sales staff (66%), select customers (51%), alliance partners (49%), agencies (46%) and distributors (44%).
The average cost to develop an extranet was $674,000, e-commerce extranets costing nearly double that amount or $1,333,000.
The vast majority (86%) have intranets, which are used primarily to disseminate information to employees such as company news, Human Resources policies, technical support and sharing documents.

Heightened Concerns About Online Privacy

Marketers are concerned about online privacy, with nearly half (45%) of the companies surveyed saying they now have Chief Privacy Officers.

Findings show that marketers are acting differently with regard to integrating online and offline databases:

Only half said they would integrate names collected on their Web site, a dramatic decrease from the 90% who said they would do so a year ago.

In contrast, when names were collected from Internet advertisements, 82% said they would integrate such information with their off-line databases.

There was also a marked decrease in use of visitor site registration with only 30% using such registration down from 47% last year. Registration is primarily required if customers want to receive newsletters (67%), participate in promotions (50%) or access restriction portions of a Web site (50%).

Other key findings on Internet Advertising:

Most popular types of Internet advertising formats by far are still banners/button (92%); 75% on search portals/engines (-9 points); 70% use some kind of sponsorships (a decline of 11 points from last year) and over than two-thirds engage in e-mail marketing (up 7 points). This year, some of the larger, newer formats were mentioned, led by ‘skyscrapers’ and ‘large rectangles.’

Media Costs: Not surprisingly given the decline in demand from dot-coms, CPM’s for online media are $11/1000 – approximately half of last year’s cost.

Production Costs: Total Internet advertising production costs rose a relatively modest 12% to $492,000 compared to the 50% increase reported last year.

Interactive Agency Compensation: Fixed-fees agreed to up front were the most frequently used type of compensation for both Web site and Interactive advertising agencies, with hybrid arrangements that combine elements of fixed fee, labor based and commission-based arrangements also popular.

The Association of National Advertisers, Inc. (ANA) is the industry’s premier trade association dedicated exclusively to marketing and brand building. Representing 315 companies with 8,000 brands that collectively spend over $100 billion in marketing communications and advertising, the Association’s members market products and services to consumers and businesses. ANA serves the needs of its members by providing marketing and advertising industry leadership in traditional and e-marketing, legislative leadership, information resources, professional development and industry-wide networking.