Traditional marketers have nearly tripled their Internet advertising spending over last year, but crucial barriers to online ad growth remain, according to a new survey by the Association of National Advertisers.
In a report released late last week, the ANA found average annual online ad spending per company jumped to $714,000 in 1998, from $251,000 last year. And while only 38% of companies were advertising on the 'Net last year, 68% are now doing Internet advertising.
The ANA report, called "Web Site Management & Internet Advertising Trends," was based on responses from 124 of its member companies, a 55% response rate. Nearly half have ad budgets more than $50 million. One-third are in the services industry, about one-third are package-goods companies, 15% sell durable goods and the rest are split among other categories.
But despite the gains, Internet advertising is still making up only a fraction of total budgeting, said Robin Wester, senior-VP of the ANA, who presented the findings of the report at the @d:tech conference in Chicago May 8.
The two top barriers to Internet advertising, according to survey respondents, are the difficulty of tracking return on investment, cited by 68%, and the lack of reliable and accurate measurement information, noted by 56%.
"Solve this measurement problem," Ms. Wester said, issuing a call to the Internet industry to find ways to more reliably measure the effectiveness of online advertising.
"Until the measurement issues are resolved, this medium will not reach its full potential," Ms. Wester said.
The report looked at both Internet advertising and Web site management trends.
On the Web management side, the average number of Web sites per company is 4.3 this year, compared to 2.5 sites in 1997. Almost half (47%) of companies now sell from their Web sites, compared to 26% last year.
Resources devoted to Web site development have also seen a tremendous boost.
The average number of people now devoted to Web site management per company is 40, compared to 14.9 last year. Also, 74% of companies use interactive agencies to help with Web site development, while 42% use consultants and only 38% use traditional agencies.
But while ad budgets, resources and total number of sites have all jumped, the cost of developing and maintaining Web sites has dropped. Last year, the average cost of developing a site was $238,800, compared to $228,000 this year. And the cost of maintaining a site has dropped from $215,800 last year to $150,000 this year.
In terms of budgeting, 62% of Internet advertising funds come from brand budgets. However, a new category called interactive marketing is emerging for some companies, the ANA found.
"The numbers are encouraging, but we're still not there yet," said Ms. Wester.
Copyright May 1998, Crain Communications Inc.