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Monday, 16 October, 2000, 10:52 GMT
Advertisers unsure about internet spend
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Advertising spend is crucial to the future of some internet companies
UK advertisers are set to spend more money next year, according to a new report.

But it is unclear how much of this will be spent on advertising on the internet.

Many internet companies say that increased advertising spend will be what ultimately helps them make a profit.

Spending on internet advertising or sponsorship does match the amount spent on commercial radio advertising, the Institute of Practitioners in Advertising ( IPA) said.

But spending on all advertising slowed in the third quarter of this year, as stock market jitters encouraged advertisers to keep a tight rein on their spending.

Internet spend

More than 55% of the 300 companies surveyed said they would increase total marketing spend next year, while about 19% said they would cut their spending.

More than 56% said that they would spend more on media advertising, while 20% forecast a fall in their spend on media advertising.

The spend on internet advertising is increasing.

It accounted for 2.5% of the overall advertising spend in the third quarter, compared with 1.5% in the previous quarter.

Many companies spend as much of their marketing spend on the internet as they do on commercial radio, with the average spend coming in at about 5.5%.

But some companies appear to be going cold on the idea of internet advertising, perhaps deterred by the sell-off in global technology stocks.

But in the third quarter, about 31% of companies said they planned to spend nothing on internet advertising, compared with 26% in the previous quarter.

Niche spend

Internet advertisers are moving away from mass purchases of space on the most popular sites such as AOL and Yahoo towards more niche areas.

"If you want to buy quality inventory, you are now paying up to 35 to 40 per 1000 views against a commodity site, which charges only about 7 to 10 per thousand," IPA director of marketing strategy Hamish Pringle said.

Overall spending on advertising in the UK last year was 15.31bn.

Other research also indicates that internet advertising is on the rise.

Jupiter Research forecasts that internet advertising in the UK will be worth $216m this year, rising to $391m next year.

In the US, advertising spend on the internet broke the $2bn mark in the second quarter of this year, according to the Internet Advertising Bureau. This represented its eighteenth consecutive quarter of positive growth.

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05 Oct 00 | Business
Advertising under pressure
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