Investing in online "real estate"

MORE than any other kind, Internet advertising addresses a very specific demographic. Consequently, companies who buy ad space are able to target a select group of people and measure the effectiveness of their investments relatively quickly and easily.

MORE than any other kind, Internet advertising addresses a very specific demographic. Consequently, companies who buy ad space are able to target a select group of people and measure the effectiveness of their investments relatively quickly and easily. Despite this advantage, companies in Slovakia rarely tap the Internet as a resource. Out of the overall volume of money spent on media campaigns, the share spent on Internet advertising is less than 1 percent.

Nine Internet media companies in Slovakia decided to join forces to present the Internet as an advantageous advertising channel. By forming a collective called the Association for Internet Media (AIM), the nine companies - Zoznam, Azet, SME online, Atlas, Centrum,,, Profesia and eTrend - are encouraging potential advertisers to buy some Internet "real estate".

AIM is in a good position to attract the attention of clients willing to lend an ear. Collectively, AIM members capture 80 percent of all Internet traffic generated in Slovakia. As a group, the income that AIM earned from online ad sales in 2004 shows that some companies see the benefit of investing in Internet media campaigns.

In 2004, AIM members sold Sk155 million (€4 million) worth of Internet advertising space, including display ads and other services, such as online catalogues and search engines. Sales figures for 2005 have already surpassed those for 2004.

"The year-on-year increase [of the volume of Internet advertising] in 2005 should stand at 40 percent. Although the growth is dynamic, the overall volume is still low," Valér Kot, AIM chairman and director of SME online, told The Slovak Spectator.

Kot pointed out that the association is not simply promoting "Internet advertising for advertising's sake". AIM intends to show that online advertising will deliver tangible business benefits and is prepared to back up its arguments with case studies.

The case studies will demonstrate a return on investment by providing details such as post-buy indicators and click-through analyses.

"It is important to educate those in the advertising industry. We want them to understand the real business benefits of Internet advertising compared to other media channels. We want them to make educated choices so they are not choosing other channels simply because they lack knowledge," Kot said.

He explained that although online advertising may seem simple in terms of planning and placing, it is often not the case.

For example, one of the main strengths of Internet advertising is the ability to gauge interest in a product by measuring click-through rates. But according to Kot, a high click-through rate does not ensure profitability, just as low click-through rates do not mean effort wasted: online advertising can influence people even if they do not respond immediately to a banner ad.

According to AIM, banking and telecommunications firms are among those routinely taking advantage of online advertising. This is because Internet users in general - highly educated people concentrated in cities - comprise a large segment of their profitable demographic.

Martin Kanianský is a senior account manager from MediaCom, a media-buying agency in Bratislava. He said that apart from IT and finance companies, fast-moving consumer goods firms are interested in Internet advertising as well.

MediaCom even has a select group of clients - services companies - who limited their media campaigns to the Internet.

"Experience in other markets, like the Czech Republic and Poland, shows that the number of clients using online advertising in their media mix is growing," Kanianský said.

He added that the volume of such clients turning to the Web as a resource depends on the level of Internet penetration in a country.

Kot, SME online's director, could not say what an ideal media mix would look like.

Every portfolio is highly individual, and investments, he said, should be optimized to best suit the company. But one thing he believes is that categorically removing online advertising is a mistake.

"So far, if a client has a limited media budget, Internet advertising is removed without question. The reason is that online advertising is considered marginal and unimportant. The reality is quite different. We have come across campaigns realized only through the Internet, and the results are very successful from the advertiser's point of view," he said.

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