Indiana Daily Student

Internet ads fail to attract

As U.S. Internet advertising revenue dropped 7.6 percent to $1.41 billion in August, some might worry about the continuing economic prosperity of "dot-com" businesses in the current climate. But others speculate that it is just another reminder that no corporation, online or otherwise, is invincible.\n"The question may not be 'Is prosperity at an end?', but rather 'At what levels will the profitability come to rest?'" said Howard Rosenbaum, assistant professor in the School of Library and Information Science.\nThis dearth in online advertising has affected the stock performance of Yahoo! Inc., the top Web site network of June 2000, with revenues at about $107 million, according to AdZone Interactive. Indeed Yahoo! stock had experienced a decline over the previous weekend, with Monday's quote falling $2.81 1/4 to $104. 12 1/2, the equivalent of a $10.5 billion dip since Aug. 30.\n"I think this move in stock prices is an effect and not a cause," Rosenbaum said. "There are changes occurring in e-commerce, particularly in business-to-consumer e-commerce, that are impacting in-stock prices (among other things). In general, e-businesses and investors are discovering that the new economy still operates with at least one old economy rule: it's hard to stay in business if you can't generate profits."\nOne reason behind such declines is the inevitable drop in "click-through" rates on the banner advertisements usually located at the top of a web page. Advertisers estimate that 0.5 percent of web surfers actually click on these product placements as opposed to 4 or 5 percent in the past. Joseph Slowinski, a professor in the School of Education, cites several reasons for this decline.\n"The thinking, in my opinion, was that the novelty effect would drive people to sites to explore and ideally purchase products or services," Slowinski said. "More recently, affiliate programs (those programs that allow people to add banner sites to their Web sites) are now attaching actual sales on these programs."\nSlowinski also cites the technological innovation of these advertisements as impediments to their long-term impact.\n"No longer can we expect people to click on banner advertisements that have become a nuisance for most Internet users," Slowinski said.\nThe fact that many Internet users are distracted by these flashing rectangular banners does not suggest the other hurdles online marketing must face, according to Rosenbaum.\n"Companies are driving harder bargains when buying ad space, and traffic may be showing a long-term downward spiral away from portals," Rosenbaum said.\nSlowinski suggests the key to success in electronic business is to have a product that can be utilized in a unique way online.\n"We all need to ask ourselves, 'What is the added value of a Web site?'," Slowinski said. "Who cares if Miracle Whip has a Web site ' does it enhance the taste of the product?"\nIn the end, some say Yahoo!'s lack of innovation in its computerized domain has lessened its prospects in competition with up-and-coming "dot-com" businesses.\n"The important companies are those developing radical new technologies," said Dennis Gannon, professor and chair of the Computer Science department. "Yahoo! is no longer in that camp. They aren't at the leading edge anymore."\nOf course the added problem remains whether the dip in Yahoo!'s stock will affect the willingness of more traditional companies to take the online plunge. Rosenbaum doesn't think so.\n"The 'Net' has transformed the way business is done," Rosenbaum said. "And there is no going back"

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