Marketers spend on sites, but not on ads

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Major marketers are committing healthy budgets to the Web, but the money isn't necessarily going toward advertising.

A survey of 126 member companies of the Association of National Advertisers found that while 90% have a Web site, only 42% of those with sites advertise them online.

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Half of marketers surveyed said they spent between $100,000 and $499,999 to develop their Web site; 41% said they budget the same amount annually to maintain their site.

But they weren't nearly as willing to part with the money to advertise online, the survey found. Fifty-four percent of those who advertise on the Web spend $100,000 or less per year doing so.


The disparity in ad spending vs. site spending is leaving Web ad salespeople frustrated and marketers defending their investments in their sites.

"People right now are paying a premium to create compelling Web sites," said Linda McCutcheon, VP-ad sales and marketing for Time Inc. New Media, which sponsored the study. "You will see a shift of dollars being spent from site creation to site promotion."

When will that shift take place?

"I wish it was yesterday," she said. "But it will happen when it happens." Such humor--tempered with uncertainty--is running through the ranks of Internet publishers, many of whom experienced an unexpectedly slow first quarter. While there are signs that the market is picking up in the second quarter, the twin bugaboos of online advertising--return on investment and measurement standards--still remain unsolved.

Sixty-five percent of the marketers surveyed by the ANA said ROI is a key issue impeding Internet advertising, while 45% cited measurement.

"There's a lot of ways in the marketing mix to create value--advertising being one of them, online advertising being part of that," said Jim Radford, manager of interactive business solutions at 3M Co., and a member of the ANA New Technologies Committee, which spearheaded the study, conducted last fall.


The ANA this week publishes the findings of its survey in a book called "Website Management and Internet Advertising Trends." The book is available for sale through New York-based ANA for $39.95.

For marketers, the book provides a benchmark against which they can measure their Web expenditures.

One of the biggest struggles Web marketers have faced is how to manage a site that crosses the lines of various corporate functions. But in this survey, at least, the problem seems to have been solved. Some 74% of respondents with a Web site say the marketing or communications department manages the site, compared with only 9% saying MIS has control.


Marketers in the survey also haven't yet realized the full potential of the Internet as a two-way communications medium. Asked to rank objectives, they rated providing information as most important, followed by corporate image. Advertising ranked third.

A survey conducted earlier this year by Advertising Age (AA, March 10) reported similar findings, showing some marketers still consider Web sites as electronic corporate information centers.

They're changing, however. Sixty percent of companies use their site to build a database, and 55% say they sell or plan to sell products or services via the Internet.

Copyright April 1997, Crain Communications Inc.

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