E-Commerce News: Personal Tech: On the Web, Branding Is Back

E-Commerce News: Personal Tech: On the Web, Branding Is Back: "Brand advertising is an altogether different animal than paid search and other types of online pitches. It's back in vogue primarily because of the Internet's endless expansion. At the same time that the Web audience is getting bigger and broader, the TV audience is becoming more fragmented even as the costs of TV spots are going up. Add in the speedy adoption of broadband , which makes viewing TV-like ads online a better experience than on slo-mo dialups, and brand-building has a new mass audience to target.
Companies such as Unicast Communications are making this easier. The New York-based outfit launched a product in the first quarter of 2004 that allows video ads to load quickly and run smoothly, regardless of the end user's connection. It also permits interactive features to be included with the pitch. In Honda's ads, for instance, viewers can look up different car colors. The technology is being used in some 90 campaigns on sites including ESPN.com, Reuters.com, Weather.com, and E! Online, says Allie Favarino, senior vice-president at Unicast.
Branding's comeback is also due to the overall surge in online advertising. Year-over-year, it was up nearly 40 percent in the first quarter of 2004, according to the Interactive Advertising Bureau and PricewaterhouseCoopers. In 2003, online ad revenues reached $7.3 billion, up from $6 billion in 2002. In fact, 2003 represented the first four quarters of consecutive revenue increases since 1999...

Perhaps the biggest indicator of growing demand for brand ads is an increase in prices. The cost of brand ads on portals has jumped 68 percent year-over-year, while entertainment sites have seen spikes as high as 90 percent, according to Jeff Lanctot, vice-president for media at Avenue A, an online advertising agency. Lanctot notes that many of the spaces being offered at higher prices are larger and more media-rich, so advertisers are getting more bang-for-the-buck for those increased dollars.
The big question is whether this will boost the fortunes of Web sites beyond Yahoo, MSN, and the other big portals. In its second quarter, CNET Networks, which operates tech news and product-review sites, cited branding as a potential growth area -- but not one that's moving the needle yet, according to Jupiter's Stein. Yahoo is fond of pointing out that 14 percent of all media consumption in the U.S. is over the Internet, but it's getting only 3 percent of all advertising dollars. Yahoo and its competitors hope that number can climb to around 8 percent to 12 percent pretty fast.

But not all inequities are so easily ironed out. Such sites might do well to consider that while more mature mediums like cable TV and satellite represent more than half of viewing hours, they still get only about 28 percent of TV ad dollars. If rich-media ads don't grow as expected, Yahoo, MSN, and others may need to find a fresh growth engine to take over where paid search is leaving off."