Markets taking direct approach

Web-based companies have turned to direct e-mailing to lure customers as Internet euphoria is now a mere memory, firms are no longer rushing to advertise online and consumers are less intrigued by old-fashioned click-through ads. "The Internet is no good for classic advertising, it's rather good for direct marketing," said Jakub Bierzyński, CEO of OMD Poland media house. Advertising banners, which began to appear on Polish computer screens while the Internet bubble expanded, proved inefficient and online promotion companies are now tempting people with new forms of product presentation. While the spending on banners accounted for 84% of the total online advertising expenditure in Poland in 2000, the share fell to 59% in 2001, while new forms such as pop-ups and viral files arrived, according to CR Media, Poland's biggest online advertising broker. Pop-ups appear when a user opens a Web page and viral files are entertaining promotion spots that advertisers e-mail to groups of Web users hoping they will distribute them to friends. Direct e-mailing is the latest industry buzzword. "This market will develop, because the future of the Internet is in reaching the customer directly," said Benita Jakubowska, sales director of the Internet department at CR Media. Direct mailing is more efficient than traditional post mailing, as it's targeted at concrete Web-users included in Internet portal databases, according to Jakubowska. Potential consumer interests are pre-defined through the portal. "The users accept receiving e-mails in return for a free e-mail account," Jakubowska said. "The advertiser pays for sending e-mails to accounts that are in the service's database." The Internet's advantage lies in a cheap communication with consumers, according to Bierzyński. "The cost of sending 1,000 e-mails to customers is next to nothing," he said. The share of spending on direct mailing in the total expenditure on online advertising rose to 10% in 2001 from 4% in 2000 and is set to climb, according to CR Media. Portals, too, are trying to sell their customer databases to replace some of the missing revenue from banner advertising. Ad revenues never materialized When most Polish portals were launched in 2000, their business models were based almost exclusively on revenue from advertising but, according to Włodzimierz Giller, a telecom and media analyst at Erste Securities, these revenues never materialized. "The Internet's share in the total advertising market is still marginal," Giller said. The size of the total online ad market is difficult to calculate, as advertising barters account for at least half of the official revenue. "A majority of online advertising is barters or self-promotion," said Konrad Pudło, the owner of the Wrocław-based Expert Monitor, which gauges Poland's advertising market. Jakubowska said that Poland's online ad market expanded to some zł. 25 million ($6 million) last year from zł. 16 million ($3.8 million) in 2000 (exclusive of barters), while Giller estimated the market at some zł. 20 million ($4.8 million) in 2001. "Interia.pl (Poland's third biggest portal) officially reported some zł. 10 million ($2.4 million) of revenue in the first three quarters of 2001, but I think more than 60% of that was barter," Giller said. According to Jakubowska the market should expand by some 20% this year, depending on the advertising situation in Poland. But Giller expected the market to shrink slightly, noting an overall advertising crisis amid economic slowdown as well as the limited efficiency of online advertising.