‘NetNews

INTERNET ADVERTISING INCREASING SWIFTLY

Internet advertising is skyrocketing, and the engines show no sign of a burnout. Spending for online ads will soar to $23 billion annually in North America by 2004, up from $3.3 billion now, according to Forrester Research Inc., a Cambridge, Mass., firm that analyzes the impact of technology. Meanwhile, new technology is making it easier for online advertisers to conduct demographic studies on users who click onto or through a particular site or banner ad.

The swiftness of these changes mirrors the rapid growth in the number of online consumers, says Forrester’s Charlene Li, a senior analyst specializing in new media research. There were 39 million U.S. households online in 1999. That number will grow to 60 million by 2003, when e-commerce is expected to total $108 billion, with the average U.S. household spending $2,678 online.

At present, companies buy $202 billion worth of advertising every year. Much of it goes to create awareness of a product or service, through traditional channels like magazines, newspapers, public relations, and billboards. But, according to Li, the next few years will see less spending on consumer awareness and more on consumer education. Companies will use the Internet to educate customers about products and persuade them to purchase those products in stores or online.

Although much of Forrester’s research relates to major retailers and suppliers, the information also provides tips for independent jewelers.

Changing channels. By 2004, Internet advertising will consume at least 10% ($23 billion) of U.S. ad dollars, money that otherwise would have gone to traditional media, according to Forrester. Newspapers will take the biggest hit, losing 18% (about $11 billion) of their revenues, especially in classifieds. Newspapers may offer more competitive rates and innovative ad packages to smaller businesses—like jewelry stores—to make up the gap.

Direct mail will probably lose about 18% (or $9 billion) in revenues to the ‘Net. Li says it will be affected by “lower-priced online programs like e-mail campaigns and Web sponsorships.” Retailers of any size can capitalize on e-mail, even without a Web site. Jewelers should consider compiling “e-mailing lists” and adding an e-mail component to their marketing campaigns.

Some major magazine advertisers, such as Ford, are already shifting big chunks of ad money to the Internet. But publications that focus on targeted markets (such as young women professionals or cigar smokers) will limit magazines’ loss to about $2 billion, or 11% of ad revenue.

On the other hand, radio (-3%), Yellow Pages (-3.4%), and TV (-5.8%) will remain effective advertising channels for retailers and will lose the fewest ad dollars to the Internet. Radio will also remain an effective way for retailers to reach specific demographic audiences.

Performance-based advertising. A retailer can put an ad or banner on other Web sites and pay the owners a percentage of sales or a fee for each click-though, per-customer lead, or per-sales lead. These “performance-based” ads account for 15% of Internet advertising, which will increase to 50% within five years, according to Forrester. They include not only ad banners and pop-up windows but also links (“For the world’s most affordable luxury watch, click here”) and online promotions (“Visit the XYZ Online Jewelry Store and register for a free necklace”).

For jewelers with Web sites, such ads can provide both revenue and traffic, especially when used in conjunction with local retailers. For example, you could carry a fee-based link from your site to a local apparel store’s site or post your link on a florist’s site. You might try putting a performance ad on high-traffic Web sites, such as a college or movie theater site. Performance ads also provide another way to measure who is coming to your site, from where, and how often.

Off-line ads and e-commerce. Your print ads, business cards, e-mail, and direct mail should include your Web address, but that’s just the beginning. Some retailers work with their suppliers to include special URLs on certain product ads in magazines. The URLs take viewers not simply to the retailer’s Web site but also to a special page featuring the product, Li notes. Watch and pen designer Jorg Hysek, for example, recently ran magazine ads for his luxury pens that listed the URL for Clique for Forbes (http://forbes.clique.com), the executive gift section of Forbes magazine’s Web site. The ad includes a keyword that takes users to a page where they can view and buy Hysek’s pens.

Traffic control. A Web site can serve as a control center to measure the effectiveness of your other advertising, says Li. Your Web server can count the number of click-throughs from your ads on other Web sites. In addition, if you include site- or page-specific URLs on ads in other media, you can determine rates of response from direct marketing, broadcast ads, and print ads.—William George Shuster

GIA EXPANDS ACCESS TO ONLINE JOB DATABASE

The Gemological Institute of America has made its online job listings available to all job-seekers free of charge at www.giaonline.gia.edu. Previously, the listings had been available only to GIA students and graduates.

The database lists jobs at all levels of experience and is regularly updated. Hard copies are available for those who do not have Internet access; there is a $10 charge for hard copies for those who are not GIA students or alumni.

The Web site is free for recruiters as well as applicants. For information, call (800) 421-7250, Ext. 7301 or (760) 603-4500, Ext. 7301.