Dot-Com Ad Spending Remains High
Editors Note: Portions of the data cited in this article are Competitive Media Reporting figures cited by Interep. Data from CMR includes network and national spot Radio spending only. Many national advertisers place the majority of their advertising directly with stations and not through a network or spot representative company. Therefore, such advertisers expenditures may not be properly reflected in the data.
In our May 20 issue, Radio Sales Today presented the highlights of an Interep report on ad spending by so-called "dot-com" advertisers. That report cited Competitive Media Reporting (CMR) figures showing that dot-com ad spending reached record levels in January 1999 and kept pace with the 1998 holiday spending boom in February 1999. Based on the data, Interep predicted that even a very conservative projection of likely 1999 revenues would place dot-coms solidly in the top ten Radio advertising categories. We here at Radio Sales Today felt the issue was worth revisiting; todays issue is an update on the subject of dot-com advertising, with additional data to back up Intereps original prediction.
1st Quarter: Up, Up & Away
a) First quarter is generally the lowest of all four quarters for advertising revenue (last year, first-quarter spending accounted for only 20% of total ad spending); and
b) fourth-quarter 1998 marked an explosion of e-commerce activity due to the holiday season, which engendered a related boom in offline advertising by dot-com companies.
Based on these figures and factoring in the categorys average monthly 1998 growth of 30%, Interep says that even applying a much more modest growth percentage to 1999 ad revenues would still land dot-coms solidly among Radio advertising heavyweights such as Telecommunications, Media & Advertising, and Automotive. And bear in mind that this projection is based only on national Radio ad spending; local dot-com advertising has the potential to put a lot of money in station coffers.
Another View: Wall Street
What are the drivers of this phenomenal growth? PaineWebber cites dot-com branding efforts fueled by the strong Internet IPO market creating "trickle-down pricing power." There will be high demand on a limited supply of TV advertising time (dot-coms will be competing with robust political spending in a contested Presidential election year). This unmet demand will create a spillover effect on Radio and other media such as outdoor and cable television. Moreover, PaineWebber identifies Radio as a particularly good choice for dot-coms because of its cost-effectiveness and brand-building qualities.
Building Your Dot-Com List