Retailers use on-line advertising to draw in
Xmas shoppers
November 20, 1998: 11:06 a.m. ET
K-Tel sings with
Playboy - Nov. 3,
1998
All I want for
Christmas - Oct.
27, 1998
Macys.Com gets a
canopy - June 26,
1998
Macys.Com
NetRatings
Toys R Us
Internet
Advertising
Bureau
Jupiter
Communications
NEW YORK (CNNfn) - T'was weeks before
Christmas, and all through the 'Net, retailers
geared up for the sales they'd make yet...
Advertising is as much a part of the holiday
season as recycled fruitcakes and fireproof
evergreens. And as more consumers bring their
Christmas lists to the Internet, cyber-savvy retailers
are boosting their advertising efforts to get a piece
of the online action.
Shoppers are expected to spend $2.3 billion
online this holiday season, according to new media
research firm Jupiter Communications, more than
twice what they spent in 1997.
However, the report also shows that historically
only 16 percent of online purchases are gift-related,
which indicates retailers are standing before a vast
reservoir of untapped revenue.
Nicole Vanderbilt, Jupiter's group director of
Digital Commerce Strategies, said she thinks
Internet gift buying will increase this season as
retailers focus their advertising campaigns.
"There are more mainstream advertisers going
on-line that ever before," said Rich LeFurgy,
chairman of the Internet Advertising Bureau. "On
top of that, you've got a bunch of on-line store
fronts up this fourth quarter that you didn't have a
year ago."
An IAB report found that total online
advertising revenue for the second quarter of 1998
reached $423 million, a 97 percent increase over the
1997 second quarter and the ninth consecutive
quarter of reported revenue growth.
The study, conducted by
PriceWaterhouseCoopers' New Media Group, shows
the relatively new medium is mirroring the
quarterly patterns of its print and broadcast cousins:
the first and third quarters are soft, while the
second and fourth quarters come on strong.
Retail was the largest growing consumer-related
category, shooting up 33 percent in the second
quarter. As for the holidays, LeFurgy is expecting
the ad revenue numbers to outshine Rudolph's nose.
"This is going to be a big year," he said.
"Historically, the fourth quarter has always been
our largest."
Oh, come all ye shoppers...
Toys R Us recently scored big on the digital ad
scene. The Web measurement firm NetRatings
found that in the week of Nov. 1, the toy-seller's
on-line banner took the number one spot, reaching
11.15 percent of the household Wed audience.
The banner ad announced that Teletubbies were
available at the new Toys R Us online store. Over
20 million impressions were seen of the ad were
seen as it appeared across such sites as Hotmail,
Sony, Microsoft, Walgreens and the Monster Board.
Macys.com, the cyber version of the venerated
department store, hired San Francisco ad agency
Left Field in July to handle its account.
"I think Christmas will be a very exciting time,"
said Kent Anderson, Macys.com president. "The
stars are in alignment."
Anderson said the company went with Left Field
because the "on-line side was a new adventure for
us."
"We've got about 140 million banners running
between now and Christmas," he said. "We put a
good chunk of our marketing budget into the online
side of the business."
Anderson noted that "building a customer base in
the Internet is just as important as it is in the real
world. It's not a mass market--it's a micro market."
Left Field managing partner Kevin Burke said
the agency's objectives are fairly straightforward.
"We want to sell stuff," he said. "We work with
a number of clients that are consumer-based. Most
of them, like Macys.com, are in for the long haul."
Surfing through a cyber wonderland
While retail giants like J.C. Penney and K-Mart
say that on-line advertising only makes up a small
part of their marketing budget - perhaps one
percent - they expect this spending to increase.
Sears recently launched an on-line version of its
Wish Book toy catalog, which comes with a list of
this year's hot toys, a browse function and,
naturally, a virtual shopping cart.
Paula Davis, a Sears spokeswoman, declined to
discuss how the company was spending on Internet
advertising, but she said the on-line ad budget has
"increased significantly over last year's."
Similarly, Duncan Muir, J.C. Penney's
spokesman, said "you're talking about a real small
base ... but it's growing very rapidly."
Vanderbilt of Jupiter Communications said "even
though the Web represents significant revenue
opportunity for (retailers), it is still only a drop in
the bucket compared to traditional store sales."
A report by InterMedia Advertising Solutions
shows that for the first quarter of 1998, on-line
advertising spending by department stores was up
446.84 percent over the same period last year. The
retail sector was up 131 percent in the same time
period.
"It really depends upon how you look at it," said
Joe Philport, InterMedia's president. "Total ad
expenditure is not very impressive. On the other
hand, the type of growth in a relatively short period
of time is very, very impressive."
The IAB's LeFurgy said big retailers were
definitely behind the online curve, partly out of
concerns about cannibalizing their brick and mortar
outlets.
"I think it's a real time education and a learning
experiment," he said. "They're not only learning,
but they're also making money online."
I'll be home for Christmas
Matt Freeman, managing partner and co-chief
creative officer at DDB Digital, a division of
advertising agency DDB Needham Worldwide, sees
a strong push in online ads this holiday season.
"With Internet advertising," Freeman said,
"you're not just trying to lure people. You're
allowing them to act on that desire and help them
fulfill a transaction. There's a real immediacy to it."
And there's one surefire way to attract shoppers
to the Internet at this crazed time of the year.
"There's no fistfights for parking spots at the
mall," Freeman said.
--by staff writer Rob Lenihan |
