Online ad demand bumps up prices

By Published on .

The Internet, one might think, has an infinite supply of ad sites. But with certain hot spots becoming such coveted properties that marketers reserve space up to a year in advance, major online-ad publishers are finding themselves battling to meet soaring demand.

Predictably, the hottest spots include the home pages of the Big Three: Yahoo!, MSN and America Online. But they also increasingly include dedicated areas of those portals and other sites that carry sector-specific information. If marketers want to buy space on these sites they are finding they have to book up to a year ahead.

"We've been advertising online since 1994, and it's getting harder and harder to get a home-page placement," said Phil Bienert, manager-CRM and e-business, Volvo Cars of North America. "You have to request placement a couple of months to a year in advance."

driving up prices

The increasing demand is also forcing up prices for sought-after inventory. Ad rates for the prime spots-which increasingly mirror TV's hottest properties in terms of the way they are bought and sold-have increased about 15% this year, agencies and publishers report. Prices for other second- and third-tier inventory have risen at a similar rate.

On the Big Three portals, marketers generally buy the home-page ad for 24-hour periods, interactive agencies said. Movie studios launching films on the weekend snatch up inventory early on Fridays and some Thursdays. Automakers firm their placements for their fall vehicle introductions by mid-to-late summer. And technology, financial services, travel and retail scramble to have their places tagged for the days they want to make a big brand splash. Naturally, the holiday time is the most competitive.

The Big Three have a combined reach of 40% of all adults online, said Greg Smith, director-media practice, Carat Interactive. "They are just like [TV] prime time."

Second-tier sites grabbed in advance are those particularly popular with the specific marketers' audiences. That includes in-market interest sites on the major portals, such as MSN Autos and the Yahoo! technology section on Yahoo!'s Tech Tuesday. It also includes Web sites that cater to specific sectors, such as for cars.

increasing demand

"If you are an insurance company and want to sponsor the insurance center on MSN Money, you need to make a commitment to lock in that position early," said Joanne Bradford, MSN's VP-chief media revenue officer, referring to another hot in-market area.

Other well-traveled sites, such as, which replays hot sports shots from events that occurred the night before through its Motion platform, are experiencing similar levels of demand. "It is such a hot commodity that ESPN can push it [far in advance]," said Fred Rubin, partner-director of iDeutsch and directDeutsch.

The early land-grab trend is prompted, to some extent, by the portals. "It gives us anything from a 20% to 40% lift by locking up revenue early in the year, depending on category," Ms. Bradford said.

But much of it is created by marketers themselves who realize that with broadband reaching about 80% of adults between home and work, and consumers' migration from TV to the Internet, online is vital to introduce a product, or launch a big branding push.

`lots of space online'

Still, the Web is not like TV, where there is a finite amount of inventory, is it? "At the top end there's some scarcity and it's sold in advance and it's creating premiums, but there's lots of inventory online," said Jim Warner, president of New York media-buying firm Avenue A.

Few plans lack a search component, too. Google has the fifth-highest audience rating, according to Nielsen/NetRatings, and according to eMarketer, paid search is over 35% of U.S. ad spending. "It's the way marketers directly affect how people find them," said David Berkowitz, director-marketing at search engine marketing firm iCrossing.

In this article:
Most Popular