Most entrepreneurs who launch a Web site are seeking product sales revenue or advertising revenue. Even corporate brochure sites frequently sell advertising. As you click through sites while you're online, proliferation of advertising gives impression that Web ad sales could be a logical (and potentially profitable) way to offset expenses of building, maintaining and promoting your site.
But before you make call to Monster.com to ask who places their advertising, you may want to consider these statistics from Jupiter Media Metrix, and premier online advertising tracking company:
· Online advertising accounts for under 2 percent of total advertising. If all goes well (and right now online advertising is not going well at all), research company predicts that will rise to 5.2 percent in five years.
· Online advertising rose an impressive 69 percent last year, but this year online ad revenue is only expected to rise 12 percent, and over next five years, growth will hover below 15 or 20 percent each year. This means online advertising will have to fight hard to rise to level of billboard advertising.
· Jupiter also reported that advertisers have their doubts about online advertising. Advertisers believe Internet ads do not reach enough people and are too expensive.
· More bad news for those who want to sell ads is Jupiter's finding that cost of Internet advertising has fallen 30 percent over past year and these costs are expected to keep falling into fall of 2001.
Online advertising is one of casualties of dot com crash. "Online advertising was built on false expectations set up in Internet bubble when everyone believed Net was magical and didn't need to be measured," said Carla Hendra, president of OgilvyOne North America, a major online advertising firm. "For first few years, if someone looked at a Web site and said 'cool,' that was enough. Now clients are becoming more conservative."
This translates into "Forget about it" for those who believe they can attract advertising dollars to their Web site. Product sales at Web sites, however, present a completely different story. Even with dot com crash, Americans are spending more money than ever online. The Web continues to be fastest-growing retail channel. According to Boston Consulting Group, online retail revenues grew 65 percent in 2000, hitting $44.5 billion. The research company expects revenues to reach 66 billion this year, up 45 percent from last year.