Experts predict spending will triple as telcos, onliners target mass market
Advertising dollars spent promoting Internet access will grow exponentially in the coming months, as major telecommunications companies, online services and Internet service providers vie to make the global network a truly mass market.
America Online, Prodigy, AT&T Corp., CompuServe and Internet service providers like Netcom On-Line Communications Services and PSINet spent a combined $37.6 million to advertise on network, cable and syndicated TV in 1995, according to Nielsen Media Research.
And while total ad spending for Internet access alone is difficult to determine, analysts expect online providers to more than triple their outlay by next year.
"The services these companies are providing are fast becoming just commodities," said Emily Green, senior analyst with Cambridge, Mass.-based Forrester Research. "Companies will need to put lots of energy into their marketing messages; success will boil down to branding. There's a huge opportunity for the advertising industry to step in and spin some magic."
The total consumer Internet access market should top out at $120 million this year, according to Forrester. By 2000, however, that market will be just shy of $2 billion.
AT&T LEADS PACK
AT&T shook the Internet world with its announcement that it would offer five free hours of access per month for its customers. AT&T WorldNet Service, which bowed March 15, soon will start an estimated $10 million ad campaign, handled primarily by Young & Rubicam, New York.
MCI Communications Corp., which introduced internetMCI 18 months ago, recently announced an alliance with Microsoft Corp. and soon will launch a campaign from Messner Vetere Berger McNamee Schmetterer/Euro RSCG, New York, touting MCI's access together with Microsoft's content.
Niche marketing, localization and community spirit are roads that some Internet providers will take to hold market share in an increasingly cutthroat market.
Internet access provider PSINet next month launches a new TV campaign, created in-house, and a print campaign via Woolward & Partners, San Francisco.
CompuServe, will increase its marketing budget for fiscal 1997, said Tom Cullivan, director of advertising. CompuServe is expected to spend about $70 million on marketing and business-building efforts.
Last month, it launched a campaign for SpryNet, its Internet access service, from Elgin Syferd/ DDB Needham, Seattle.
Prodigy Services Co. later this year will also launch an Internet-only access product, Prodigy.net. The service is looking for an agency beyond agency of record Cliff Freeman & Partners, New York.
America Online may set aside up to $300 million for its fiscal 1997 marketing budget, up from about $100 million last year, said President Ted Leonsis. But he doesn't want to spend much of that money advertising Web access.
"The Internet is an anti-market," he said. "Advertising connectivity to the Web is like saying your cable system has a set-top box," he said.
TELCOS JOIN THE DANCE
Telecommunications companies will be looking to tap the local community and loyalty they've already built around their phone brands to lure customers.
BellSouth by midsummer plans to launch a consumer Internet access product, as will Sprint Corp., Bell Atlantic Corp., Nynex Corp., Pacific Telesis Corp. and Ameritech Corp. Each of the telcos plans to offer access and local content as a way of building community for their regional consumers.
"The regional Bells will have to wake up soon," said Lane Bess, director of product marketing for AT&T WorldNet Services. "Only a few will be able to offer access successfully alone. I'm sure we'll be seeing lots of mergers, alliances or acquisitions among the Bells."
Many believe that the 1,000 or so Internet access companies could dwindle if they can't compete with bigger providers.
"I don't think it's too late for smaller providers, though," said Gary Arlen, president of Bethesda, Md.-based Arlen Communications. "If they find a niche, like local content, or form a partnership, they all could compete."
Copyright March 1996 Crain Communications Inc.