New media marketing and old media muscle

Internet companies are going offline to encourage customers to spend money on the web. This may sound ironic, but as dot-com companies struggle to capture a customer base, the advertising medium of choice seems to be television.

In 1999 internet companies in the UK spent £30m on advertising across all media, with approximately £15m of that going on television advertising, according to figures by Carlton TV.

While it expects advertising expenditure by UK companies to leap to £300m this year, television advertising will account for £200m of that.

For a newly established company like car retailer jamjar.com, advertising is about establishing brand recognition with the widest number of people. Television is the obvious option according to Justin Skinner, marketing manager at jamjar.com.

"You can reach a far greater audience through traditional media, particularly TV. An ad can reach 17 million people in the break in Coronation Street as opposed to the UK maximum of 12.6 million that you'll get even if you're on every site on the web," he said.

If dot-coms - whose bread and butter is trading online - prefer to use traditional media, how much confidence can bricks and mortar companies be expected to have in internet advertising?

In reality the online advertising market is small, both in terms of revenue and audience. A recent study from Jupiter Communications reports that while worldwide online revenue is set to jump from £7bn in 2000 to £18.5bn in 2003, it will still account for less than five per cent of total media expenditure.

US internet survey group Ad Relevance recently reported that 20 per cent of adverts on the 500 highest trafficked US sites were inhouse banners. This would suggest internet companies are disguising the shortfall by advertising their own services.

TV has familiarity on its side. According to a report by Forrester Research, 50 per cent of UK internet users are attracted to websites through adverts in the broadcast media. But this also signals some bad news for internet companies. As broadcasters identify potentially lucrative ad slots, dot-coms will pay more for them.

Furthermore, resistance to advertising online could be aggravated by the current business-to-consumer climate. To listen to the nay-sayers it would appear that no one is shopping online, and no venture capitalist is going to risk backing the next boo.com.

To a certain extent we should believe the hype. According to a Which? online survey in June, up to one third of the UK population characterise themselves as "do not use the internet and have no plans to do so". In retail terms that's one third of potential sales gone because the consumer is not wired to the web.

But there is a push to get companies online, particularly bricks and mortar firms with well-established brands.

Researchers AC Nielsen recently established an internet analysis division, E-ratings.com, to provide companies interested in the online medium with internet audience information.

According to John Purcell, UK sales and marketing director with E-ratings.com, the internet may be a small advertising medium now, but it is set for massive growth.

He said: "UK internet users jumped by over 2 million in the past three months. What other media sector is growing by that much? In fact some of them are losing their audience. Show me a newspaper that upped its readership by that much. There are a number of companies already making substantial profits from internet advertising. It's a medium that is here to stay."

But with the honeymoon period now over, profitability is the goal for most dot-coms and that depends on capturing the right number and type of users. The medium may be here to stay, but it is unlikely any company - dot-com or otherwise - can ignore traditional ways of getting their messages across.