Online ad spending to skyrocket

The much-ballyhooed merging of online advertising and direct marketing continues apace, according to a new study from Jupiter Communications, which estimates that by 2002 online publishers will count $7.7 billion in ad revenue and $1.3 billion in direct marketing income.

Those direct marketing revenues could come from renting subscriber lists or collecting commissions for helping sell an advertiser's products. Jupiter said such deals will become central in publisher-advertiser relations.

For 1997, Jupiter expects nearly $940 million in online ad revenues but a paltry $86 million in direct marketing deals.

"Publishers who provide wide distribution channels to marketers and who carry consumers closer to the point of sale will be the winners," Peter Storck, director of Jupiter's online advertising group said in a statement. "Only a few big players--America Online in particular--have demonstrated the muscle so far."

For publishers, Jupiter thinks, size matters. Ad dollars will become concentrated in a handful of giant online publishers.

In other findings in the report, Jupiter said the following:

Local ad spending, mostly in classified ads, will account for 54 percent of spending in the year 2002, passing national ads.

Sponsorships of content areas and "intermercials" (ads that show up when changing pages within a Web site) will garner half the online ad spending in 2002. This year, Jupiter expects 80 percent of online spending to go to banner ads.

Online media will draw more and more ad spending because it allows for accountability; publishers and advertisers can know whether an ad campaign pays off.

Online's targeted marketing potential, so-called one-to-one marketing, may not be fulfilled because advertisers won't want to pay the full cost of targeting.