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CANADA LAGS U.S. IN ONLINE ADS

Better content and measurement of usage would help Canadian web sites draw advertisers. Canadian business executives called "fat and lazy".

Source: The Montreal Gazette

Posted on November 8, 2000

      Whoever said that potential is a fancy word for "ain't done nothin' yet," might have been thinking about the Canadian Internet advertising industry. Much of the hype has more to do with its possibilities than actual accomplishments.

      The disproportionate attention is because of high growth rates and results being generated by advertisers south of the border. Despite the fact that more Canadians than Americans have access to the Net at home, we continue to lag in terms of online ad spending.

      The Internet Advertising Bureau estimates that Canadian spending in 2000 will total $125.1 million, up 92.2 per cent from $65.1 million in 1999. Despite these impressive growth numbers, this represents only 1.29 per cent of spending on major media such as newspapers, television and radio.

      American companies will pour $5.3 billion U.S. into online ads this year. When comparing statistics about the two economies, a good rule of thumb is to use a 10-to-one ratio. This year, U.S. online advertisers will outspend Canadians 65 to one.

      There are several things holding back Canadian advertisers. Local Web sites have lagged in providing good content, and published advertising rates are high. But more important, until recently, few companies were able to provide advertisers with reliable qualitative and quantitative data about people visiting their web sites.

      "The Internet is a measurable medium," said Sherry Barmania, marketing director at Media Metrix Canada, a firm that tracks online usage at high-traffic Web sites in major markets around the world.

      "In the newspaper industry, there are companies that measure circulation and readership so (marketers) know who advertising will reach. We provide advertisers similar information about the Web." Media Metrix does this by taking representative samples of Internet users from major markets around the world, and tracking which sites they visit. More than 100,000 people's web moves are studied.

      Among the data the company provides customers with are: number of unique visitors to major Web sites, average minutes spent per person visiting each page, and other demographic information such as age and gender composition. Reports provided by independent companies such as Media Metrix are considered more useful to advertisers than information supplied by web site operators themselves, since they might be tempted to inflate usage statistics to charge higher advertising rates.

      Canadian business executives appear to be in a state of inertia when it comes to adopting many Internet technologies. The cheap dollar, which has lowered the price of exports, has given local companies a free ride when it comes to competing with their American rivals. Rather than use this to their advantage, many have grown fat and lazy taking profits, when they should be using the breathing room to restructure. Internet advertising has not been the only casualty; Canadian companies are also behind in setting up E-commerce sites. This laxness will come at a stiff price if, as many analysts expect, the Canadian dollar bounces back again to a more natural level.

      But the upside potential for Net advertising remains high. "The Internet is fast becoming a mainstream medium," said Barmania. "The number of users is increasing, and they are spending more time online as well as viewing more content."

      The profile of the average Net user is also changing. Until recently, there were more men online, but in June 2000, the number of women surged ahead for the first time in the U.S. What's more, the growth rate among women continues to exceed that of the over-all population, so the gap should widen.

      Worldwide, most web-users are from North America. But this lead will decrease over the next few years. Although international brands such as Yahoo! and America Online continue to stand out, regional names like Sympatico and Toile du Quebec are grabbing a bigger share.

      The Internet Advertising Bureau estimates that 10.5 million Canadians, or 35 per cent of the population, had Internet access from home in 1999, a number that is expected to grow to 19.2 million, or 64 per cent of the population, by 2003.

      Ironically, this total is higher than in the U.S., where only 22 per cent of Americans had access from home in 1999. But to profit from this, Canadian companies are going to have to take some initiative, or else competitors from our southern neighbour are going to grab the high ground.




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