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Study cites a decline in ad efficiency
Monday, March 04 2002
by Paula Mythen


A new study by Arbitron and Edison Media Research confirms a continuing decline
in the percentage of on-line Americans who are responding to banner ads. 

 





The study, "Internet 8: Advertising vs. Subscription - Which Streaming Model
Will Win?" reports that the proportion of those who have clicked on a banner ad
in the last month dropped from 31 percent in January 2000 to 14 percent in
January 2002. Moreover, many respondents to the survey said that banner ads are
more annoying than both on-line audio or video ads. 

 

In Ireland, advertisers spent in excess of EUR1.5 million on the Web in the third
quarter of 2001, according to the most recent data from the Interactive
Advertising Bureau of Ireland (IAB Ireland), accounting for less than one percent
of total media spend in this country. 

 

In February of 2002, The Interactive Advertising Bureau in the US said it would
release new standards for on-line ads in an attempt to jumpstart the flagging
industry. Internet advertising in the United States declined 4.1 percent in the
third quarter of 2001, totalling USD1.792 billion from USD1.868 billion in Q2.
For the first nine months of 2001 revenue came to USD5.55 billion, compared to
USD6.06 billion for the first three quarters of 2000, down 8.4 percent according
to IAB figures.

 

The Arbitron research found that approximately nine million consumers who have
listened to Internet audio said they would be willing to pay a small fee to
listen to the one audio channel they listen to most on-line. The study also
revealed that four in 10 audio "streamies" -- those who have listened to
Internet audio -- would be willing to pay a small fee for commercial-free
content, high-quality audio or content they can not find anywhere else. 

 

"This study presents important evidence about the consumer's willingness to pay
a subscription fee for streaming content," said Bill Rose, vice president and
general manager, Arbitron Webcast Services. "For streaming subscription models
to be successful, however, content providers must follow the time-tested model of
offering something extra to the consumer: no commercials and great, exclusive
content."

 

The study also shows significant growth in the regular use of on-line audio and
video with many respondents citing unique content as the main draw. Overall,
approximately 80 million Americans age 12 and older reported having ever accessed
streaming audio or video on-line. Interestingly the age composition of those who
listen or watch on-line in the past month has become remarkably balanced among
all age groups from 12 to 54 years old. 

 

"The streaming media business sector has experienced growing pains in recent
months, and it is facing new controversies regarding digital rights fees," said
Larry Rosin, president of Edison Media Research.  "Despite these issues,
consumers continue to use streaming media in record numbers."

 

Other findings the report highlighted include the number of Americans who have
purchased on-line has tripled in three years, increasing from 13 percent in
January 1999 to 40 percent in January 2002. Furthermore, more than one in five
Americans have made on-line buying a regular habit. 

 

The survey was conducted in January 2002 and consisted of 2,508 telephone
interviews with a randomly selected national sample of Arbitron's Fall 2001 radio
diary keepers. Since 1998, Arbitron and Edison Media Research have conducted
bi-annual studies of the Internet and streaming media.