Internet Advertising Growing More Diverse -
Study
By Ilaina Jonas
NEW YORK (Reuters) - Computer-related advertisers still dominate the Internet,
but their share of overall spending shrunk in 1998, as drug makers and other
types of businesses stepped up their marketing presence in cyberspace, a report issued Friday said.
All told, advertising spending channeled to the top sites jumped 93 percent to $1.03 billion in 1998, with
the top 50 sites taking in more than $965.5 million in revenue, according to the InterWatch report, which
tracks advertising spending at 300 Web venues. The study was issued by InterMedia Advertising
Solutions.
''This is not just an information transmission medium,'' said Jim Nail, senior analyst for Forrester
Research Inc. (Nasdaq:FORR - news) ''It's really a tool to do more than gather and manipulate
information. The Web really is starting to become an integral part of people's lives.''
Internet advertising spending by computer-related businesses jumped nearly 64 percent in 1998 from the
previous year to $461.8 million, the report said. But their share of total spending withered to 44.7
percent from 50.5 percent in 1997.
Meanwhile, more traditional industries stepped up their Internet advertising, with the pharmaceutical
industry, which spent nearly $8 million, up from $1.6 million the previous year, leading the way in terms
of fastest growing. Other burgeoning advertisers include governments and organizations, whose
spending rose to nearly $13 million from $3 million. Spending by the building materials industry rose 274
percent to $2.7 million, while retailers spent nearly $36 million, up 235.6 percent.
''It's almost like we're seeing three different generations of industry migrating to the Internet,'' said Joe
Philport, InterMedia president.
In 1996, computer and software companies, and online services generated almost all of the $220.5
million spent on advertising on the 300 sites, according to Intermedia's first report. The most recent
report showed pharmaceuticals and the financial industry coming on strong.
In terms of share of total dollars spent on Web advertising, the financial industry was No. 2 with 9
percent, or $92.8 million. Direct response companies -- catalog and e-commerce vendors -- were No. 3
with 7.18 percent, or $74.3 million. Local services and amusements ranked fourth with 5 percent, or
$52.3 million, while media and advertising was a close No. 5, with 5 percent, or $51.6 million. The
automotive industry made a showing at No. 6, with 4.6 percent and $47.9 million.
The top 10 advertisers in 1998 included four companies who were not even ranked among the top 15 in
1997. Microsoft Corp. (Nasdaq:MSFT - news) remained the leading spender at $34.9 million, up 9.4
percent, closely followed by International Business Machines Corp. (NYSE:IBM - news) at $28.5 million,
up 58.6 percent. Compaq Computer Corp. (NYSE:CPQ - news) jumped from the 22nd spot to 3rd,
spending $16.2 million. General Motors Corp. (NYSE:GM - news) leapfrogged from to the fourth spot in
1998 from No. 9, with $12.7 million in spending, up 85 percent.
''Anyone spending over 1 percent is using the Internet aggressively,'' Philport said. ''The industry
leaders of the Internet are investing more and more of their total budget in the Internet. I think it will grow
as there's a better understanding.''
To be sure, the billion dollar benchmark for Internet advertising is far less than the combined $34.5
billion spent on television advertising last year, according to the report and figures supplied by its sister
company Competitive Media Reporting.
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