Web Advertising on the Comeback Trail

Rhett Pardon
LOS ANGELES – Internet companies are finding the good times of advertising are coming back, and market research companies say they should stay.

The reason: Marketers are spending more money on the web, hoping to reach young men and teenagers who spend more time online than watching television.

While web ads are getting more creative because of the wider use of broadband, there are some big-money marketing campaigns that are shaking things up.

One such campaign is from PHE.’s Adam & Eve, which distributes sex videos and toys.

The Hillsborough, N.C.-based company is about to launch a new e-mail marketing campaign. Some of the e-mail that will reach its nearly 4 million customers includes a video starring animated sex toys.

Robert Shaw West of The Republik, the agency that created the videos, told XBiz they are "little situation comedies that are so entertaining … so provocative."

Internet advertising spending, which declined in 2001 and 2002, rose 20 percent to $7.2 billion last year, according to data compiled by PricewaterhouseCoopers and the Interactive Advertising Bureau.

Forrester Research projects that just over half of the money spent on Internet advertising this year will go to display ads. Nearly one-third will go to search-engine marketing, while the rest will go to e-mail promotions.

After recent years of gloomy forecasts, the confidence of the Internet grew brighter this week following Internet bellwether Yahoo Inc.'s report of strong quarterly earnings. The Sunnyvale, Calif.-based company reported a first quarter net profit of $101 million, more than double one year earlier, driven largely by strong advertising sales.

And many wait in anticipation of the initial public offering of Mountain View, Calif.-based Google, which has become the No. 1 search engine.

Last month, Yahoo said it was launching a new paid inclusion program that gives advertisers the ability to pay to have their links appear mixed in with non-commercial search results. The company said the "content acquisition program" was aimed at improving the relevance of search terms.

But the move attracted negative comparisons with Yahoo's main rival, Google, which clearly separates sponsored links in a separate area.