Online advertisers still struggle for acceptance

25 Apr 2003

Although €6.4m was spent on internet advertising last year, this is still only 1pc of the overall amount spent on advertising in the Irish economy.

In its struggle for acceptance as a media channel to be reckoned with alongside mainstream channels such as newspapers and magazines, TV and radio, internet advertising can be viewed as a victim of its own potential success. At first the battle was to win the hearts, pockets and eyeballs of the buying public and indeed with one in four Irish adults being regular internet users that battle appears to be largely won.

However, the problem that has dogged internet advertising is acceptance in the mainstream, proving just what people are looking at – will they notice internet ads, deliver the all-important click through and perhaps buy something – and using this data to convince mainstream advertising buyers that internet advertising works. Indeed, the use of technologies like cookies and monitoring website traffic in order to assess the number of ‘eyeballs’ that see internet ads ought to provide perhaps more accuracy than any other medium in assessing numbers. Unfortunately for the fledgling internet advertising industry too many varying means of assessing figures for effectiveness, ranging from monitoring website traffic to adding up click throughs, has led to a lack of accountability for the sector, making the task of convincing mainstream media buyers to take internet advertising seriously an up-hill battle.

With the closure of Nielsen NetRatings’ Irish office last year, the local internet advertising industry in Ireland has been left with no clear means of assessing or presenting the effectiveness of internet advertising to unconvinced media buyers. This has prompted a number of prominent internet media organisations to band together and conduct their own research in an accountable and authoritative fashion. The new Joint National Internet Research (JNIR) is an effort to develop a realistic system that those putting money into online advertising can trust and make informed decisions about where and how to advertise.

The organisations involved in JNIR include Yahoo!, MSN, The Irish Times, Esat BT, Eircom, RTÉ and Entertainment Ireland. So far, JNIR has completed an offline survey of the public and will soon complete an online public survey.

At a recent meeting of the Interactive Advertising Bureau of Ireland (IABI) in Dublin, the need for conclusive research such as that of the JNIR was clearly voice. Research carried out by IABI and PricewaterhouseCoopers found that approximately €6.4m was spent on internet advertising in Ireland last year. However, online advertisers were warned that this was only 1pc of the total spend on advertising in the Irish market last year.

The top sites in the Irish market are still based overseas, with Yahoo! notching up 64 million page impressions per month and MSN scoring 58 million page impressions per month.

In terms of the fourth quarter of 2002, the volume spent on online advertising was €1.6m, up 19pc on the previous year’s quarter. Sales networks or specific online ad bureaus accounted for 36pc of ad buying and placing, whilst the remaining 64pc was done by local websites themselves.

The banner ad still remains the dominant form of advertising in this country, accounting for 40pc of total spend. However, interstitials or what many consider those pesky pop-up ads have been clearly waning, accounting for 1pc of total spend. “There has been an increase on spend on advertising rather than sponsorships,” notes Shenda Loughnane of net advertising firm ICAN. The retail and consumer sectors accounted for the lion’s share of net advertising spend at 27pc of advertising in the fourth quarter, followed by business at 20pc and lifestyle at 23pc of the market.

In terms of the need for JNIR-type research, Loughnane says: “There was never a question about accuracy in terms of numbers viewing and responding to interactive advertising. However, the industry never had a model that could tell you which sites had the highest audiences so that advertisers could decide where best to allocate their budgets.” Loughnane acknowledges that 1pc is still a tiny slice of the advertising pie in Ireland but says that this was in line with the UK and other economies. “To be realistic, we will be looking to grow this to between 1.5pc and 2pc over the coming year and that’s pretty much in line with expectations in the UK.”

Gerard O’Neill of Amarach, a research firm that has been chronicling the rise of the internet in Ireland for the past six years, believes that there is plenty of room for the internet market to thrive. “We’ve pretty much got past all the hype and dotbombs and it is worth noting that the internet is still growing. With four out of 10 adults in Ireland using the internet, it is fair to say that the net has come of age in Ireland and despite all the doom and gloom of the past few years, it is a space that is actually thriving. It is maturing and the consumer is comfortable with the medium and numbers continue to grow. You only have to see the usage of to buy airplane tickets to see that it has become an accepted part of people’s lives,” O’Neill says.

In terms of how the JNIR research will be presented, Darren McGrath of Esat BT says that the first phase of the plan is to present the information in such a way that existing or potential internet media buyers can make informed decisions and view internet advertising as a very real medium alongside the mainstream. “We almost want to make it like the Ladybird guide to online advertising, in that there will be no hype or jargon just easy to understand facts and figures about web traffic in Ireland and which are the most visited sites,” McGrath says.

While much of the internet industry has welcomed the move to create a JNIR standard, some spectators have voiced concern that the JNIR could become a closed shop amongst the eight or so media organisations behind it and that only they may benefit from the research.

Nevertheless, the existence of authoritative research on the habits of the Irish buying public online may be just the shot in the arm the fledgling internet advertising sector needs in its ongoing struggle for acceptance.

By John Kennedy