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Tuesday, 20 March, 2001, 12:45 GMT
Marketeers prefer email to banners
Yahoo relies heavily on advertising income
Portals like Yahoo rely heavily on advertising income
By BBC News Online's Brian Wheeler

Just 3% of UK marketing chiefs think online banner advertising is a good way to generate new business, according to a survey.

The findings will come as a further blow to web publishers and portals, such as MSN, Yahoo and Excite, which rely heavily on advertising revenue.

In the study by Marketing Week magazine and software house New World Commerce, 63% of companies said they had an e-marketing strategy, with web sites being seen as the most effective online marketing tool.

A further 17% thought e-mail was the most effective marketing medium - but only a tiny percentage of respondents put their faith in banner advertising.

Revenue slump

The survey confirms fears that banner ads, which account for about half of all online advertising revenue, are not taken seriously by mainstream advertisers.

What is the most effective means of customer acquisition?
45% Direct Mail
27% Exhibitions
23% Websites
22% Telemarketing
17% Email
15% TV/Radio ads
13% Print ads
3% Banner ads
23% Other
This - added to the end of the dot.com boom - has led to a dramatic slump in revenues and put a question mark over the future of many well-known online ventures.

UK internet advertising revenue showed its first ever quarterly decline in the third quarter of last year, when it fell 6.5%, according to the latest available figures from industry body The Internet Advertising Bureau (IAB).

Banner ads have also been hit by the growing availability of ad-blocking software such as Adsubtract and Adwiper.

Unfair advantage

More than 400 marketing managers took part in the Marketing Week survey, in the financial services, government, IT, manufacturing, retail, telecommunications, utilities and service sector.

The target audience for 39% of respondents was adult consumers, 6% wanted to communicate with children and the remainder were concerned with business to business marketing.

Its findings follow a report by US consultants Booz, Allen & Hamilton, which urged internet portals to seek alternative revenue streams, such as subscription and paid content.

Some analysts have argued that measuring the effectiveness of banner ads by click rates puts them at an unfair advantage to print and poster advertising, which have no accurate way of measuring numbers of viewers.

Fighting back

However, internet advertisers are poised to fight back with a new generation of bigger, more intrusive ads.

Earlier this month, the IAB agreed voluntary guidelines to increase the size and prominence of banner ads to make them harder to ignore.

One format, the 'skyscraper' will form a vertical strip down the side of the page and will be much bigger than existing banners.

Another format is a square shape which appears in the middle of page, measuring 336 x 280 pixels, compared to the banner's 468 x 60.

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See also:

20 Mar 01 | Business
Financial websites buck the trend
19 Mar 01 | Business
MSN builds UK lead over Yahoo
16 Feb 01 | Business
End in sight for banner ads?
08 Mar 01 | Business
Yahoo warns earnings will slip
31 Oct 00 | Business
BBC ponders online adverts
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