NONE: Real numbers on web ad / sales revenue
Real numbers on web ad / sales revenue
Harry Wolhandler (hwolhandler_at_activmedia.com)
Mon, 09 Sep 1996 10:47:34 -0400
>Obviously contacting the web site operators and asking them what their
>actual revenues are might produce more accurate results, but then again
>most people might not want to disclose that information (I probably would
>not, unless the data was not tied back to my sites). So is guesstimating
>based on site inspections and published rates the best that can be done?
>Cliff Kurtzman
>The Tenagra Corporation
Well, Cliff, you=92ve coaxed me to delurk. I=92m Harry Wolhandler, a senior
research analyst at ActivMedia Inc. I=92ve had the privilege to work with
Jeanne Dietsch and analyze information that HAS been directly collected
from a broad-scale random sample of over 1100 Web marketers. Every six
months for the past 1=BD years, ActivMedia performs a random sample study
of commerce on the net and asks Web marketers about the information you
seek. And we agree that WebTrack=92s method is a little off base.
Based on findings from our recently released (7/30/96) third tracking wave,
"The REAL NUMBERS behind Net Profits", one in seven commercial websites
have advertisers (14%), although only one in twenty show monthly cash
revenue from advertising (6%). Based on 85% compliance reporting other
sensitive sales data, we believe these to be reasonable estimates for
actual proportions of advertising / paid advertising among commercial
websites. A few other details of interest: average growth in same-site
advertisers is reported at roughly 10% per month, while growth in websites
has been fairly constant at 19% per month over the past 14 months, so total
monthly ad revenues may be=20growing at a compound rate of 31% (we'll see
in our 4th semi-annual tracking wave).
>>My hunch (and that's all it is) is that there are many THOUSANDS of sites
>>that offer advertising space. After all, the Commonwealth Network
>>ALONE has over 3,000 participating sites, and I'm sure any of them would
>>gladly sell ad space direct.
>>-- Mark J. Welch, Esq. (Estate Planning, Probate & Trust Law)
Mark's speculation is also borne out by our findings. In June alone, Web
revenues for the 5,500 or so smaller, non-top-100 sites with ad revenue represented by our random sample were conservatively projected at $19 million, and first six-month revenues at $89 million.
Based on this analysis, the market is far more diffuse than WebTrack
presents. Assuming top 10 site ad revenues are correct at $47.5 million as
reported (66% x $71.9M), the top 10 sites only account for a third of all
advertising dollars [35$ =3D $47.5 / ($47.5M + $89M) - - WebTrack estimates
added to our own, since none of the top 10 appear in our random sample].
It appears WebTrack's methodology of only watching the top of the heap
misses most of a far broader emerging marketplace, which raises an
important point. Although top advertising venues are fun to watch and
undoubtedly impact the web marketplace, how many of our / clients sites are
among them? Based on our research, most commercial web development occurs
among the other 99,990 commercial web marketers.
Many are successfully putting the web to work for their businesses, despite
the common web myth that few websites are profitable. Two in five websites
in our study (commercial sites with 2+ months web experience, randomly
sampled over the entire range of business types) generate revenues (39%),
of which only a few rely solely on advertising revenue (2%). Most of these
(37%) generate sales revenue, nearly a third of all websites currently
consider their site profitable (31%). Sales revenues over the web ($129
million in June) are nearly seven times ad revenues ($19 million in
June)for the same period.
Of course, not all website business segments benefit equally from
distribution of revenues (ask the content publishers seeking ads and
subscribers about fickle Netizen support). But within each of the various
business segments (e.g., publishing, manufacturing, b2b and consumer
products and services, computers, etc.) smart commercial websites are
finding success.
I=92d love to provide more direct information, but the semi-annual tracking
report is one of our primary business products, so this summary will have
to do. Other info is available at the ActivMedia website,
www.activmedia.com. We are currently working on a follow-up report on
advertising on the web - - how ads contribute to profits and how ads
contribute to successful promotion plans for websites with various revenue
models. More info will be posted at our site as it becomes available in
the next few weeks.
Harry
Harold Wolhandler, Senior Research Analyst
hwolhandler_at_activmedia.com
ActivMedia,Inc (800)639-9481 (603)924-9100 fax(603)924-2184
* The Real Numbers behind Net Profits *
See Mid-'96 Web Sales / Profitability figures at: www.activmedia.com
Coming soon:
The Real Story behind Advertising and =91Net Profits
The Real Numbers behind 'Net Profits for Manufacturers
The Real Numbers behind 'Net Profits for Educational Marketers
