Articles of Interest

Tuesday, July 27, 2004

WSJ.com - Online Ad Dollars Set to Match, Then Go Ahead of Magazines'

WSJ.com - Online Ad Dollars Set to Match, Then Go Ahead of Magazines'
Online Ad Dollars Set to Match,
Then Go Ahead of Magazines'

Forecast Cites Web's Skill
At Targeting an Audience;
Is Print Losing Its Appeal?
By BRIAN STEINBERG
July 27, 2004; Page B7

Magazine publishers often set out to woo advertising dollars from television, but they might want to focus on a different sort of screen.

A new report from Jupitermedia's JupiterResearch predicts that dollars spent on online advertising -- defined as a paid message featured on a Web site, online service or other interactive medium, such as instant message or e-mail -- will match dollars spent on magazines by 2007, then surpass them in 2008.

In a sign of how the Internet is rebounding, Jupiter predicts that marketers will spend $8.4 billion on online advertising in 2004, while earmarking $12.2 billion for magazines. In 2007, the two platforms each will get $13.8 billion. In 2008, online ad spending surges ahead, capturing $15 billion, compared to magazines' $14.5 billion, Jupiter predicts. The gap widens in 2009. The Jupiter forecast is set to be released Wednesday.


Web offerings have become "more targeted and much smarter" about how they measure their audience, says Gary Stein, a Jupiter senior analyst. Driving the money, he says, is the burgeoning popularity of paid-search advertising, which allows marketers to link their names to very individual Web activity. Also important: The spread of high-speed broadband connections will spur more use of ads that are more like TV commercials, creatively using video and sound. Meanwhile, Internet display ads have shown new momentum this year. The report calls for usage minutes and ad dollars to cluster around four top properties: Yahoo, Google, Time Warner's AOL and Microsoft's MSN.

Of course, Jupiter has been a longtime supporter of the Internet -- and can get ahead of itself. In 1999, for example, Jupiter said it expected online advertising in 2003 to total $11.5 billion, but the economic downturn got in the way. According to the company's current report, 2003 online advertising came to $6.6 billion.

The report could certainly stoke the continuing debate about how attractive the print medium is to advertisers. While many publishers cautiously point to an expected rebound, ad pages for magazines -- general interest and Sunday magazines -- have been down for several years, according to statistics from Publishers Information Bureau. In 2003, ad pages were off 0.6%, compared with 2002. In 2002, pages fell 3.05%. In 2001, pages declined about 11.6%. In 2000, during better times, pages were up 9.8%. For the first six months of 2004, ad pages have increased 0.7%, according to PIB.

One forecast suggests consumer eyeballs are moving away from printed material. According to a study from Veronis Suhler Stevenson, the number of hours per year that consumers spend with print media has dropped steadily since 1997 and is expected to continue to decline through 2007.

Of course, most magazines have their own Internet presence, through which they can meld magazine content with online distribution. In April 2003, Time Warner's Time Inc. magazine unit elected to shut off free access to Web versions of several of its publications, and instead made the content available only to subscribers, recent newsstand buyers and members of the company's America Online service.

Media buyers and publishers aren't certain that online content is draining advertising dollars away from print. "Online is being added to plans, but it doesn't necessarily take away from the amount spent on other media," says Alex Tamayo of Media Contacts, part of Havas's MPG media-services firm. Consumers can use both media, one for quick information gathering and one for a more luxurious read, says Michael Clinton, executive vice president of Hearst's Hearst Magazines, which co-owns SmartMoney with Dow Jones, publisher of The Wall Street Journal and the Online Journal. "One does not preclude the other," he says.

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