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about Asia Buzz  |  more Asia Buzz

Asia Buzz: Online Advertising
Can you remember the last banner ad you clicked on?
By ERIC ELLIS

October 31, 2000
Web posted at 3:30 p.m. Hong Kong time, 3:30 a.m. EDT


So who is right? The skeptics who say online advertising is a dud? Or the boosters "pumped" in the belief that online advertising is about to take off?

 INTERACTIVE  
Ticked off at Asia Buzz? Turned on? Talk back to TIME
 
The numbers don't look good -- the numbers in the market that is. The shares of NASDAQ-listed companies dependent on online advertising are off 80% and more since their highs earlier this year. Need further evidence? Click on the depressing Downside.com, which tracks the "death dates" of Internet companies, and look up two of the sector's biggies -- Engage and 24/7 Media. Downside examines the cash in the business, the quality of the revenue coming in the door, and the costs walking out the door. Unless these companies go out and raise new money -- and this is the toughest, harshest market for doing so in a decade -- Downside.com reckons outfits like Engage and 24/7 Media won't be around this time next year.

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   ASIAWEEK
Intelligence
The story behind today's news from the editors of Asiaweek

American advertising research group AdZone Interactive reports that online ad spending in August was 7.6% below July. When pressed, industry insiders say the quality of online advertising's reach is subsiding. In 1998, about 2% of users exposed to a banner ad on a website clicked on it. Today -- as websites have multiplied exponentially -- that ratio is a fraction of what it was, while clicks-per-thousand ad rates have been slashed.

Even shares in Yahoo!, one of the few companies that earns profits from online ads and placement because of its massive reach and brand recognition, saw its shares take a big tumble recently when it admitted that 40% of their ad revenue had come from dying dotcoms. Even some of those in the industry are skeptical. Adam Boettiger, the founder of U.S.-based I-Advertising.com, said recently that, "online advertising billed itself as being dramatically better. Unfortunately, we shot ourselves in the foot."

If only Asia had such candor. Hong Kong-based Asiacontent.com has a deal with U.S.-based online ad group DoubleClick to roll out the brand across the region. But investors aren't convinced it's a good business. Asiacontent.com's business model is predicated around content sites like MTV Asia and E! Online, and driving advertising to them and other sites through DoubleClick. Goldman Sachs took Asiacontent.com public on the NASDAQ as the April tech wreck kicked in. Sadly, it was one of the Asian Net's biggest flops. You can now buy what were then $14 shares in April for $1.75. So how can Asiacontent.com turn itself around? It's unclear. Its Singapore-based manager tried to convince an audience of travel executives at a TIME sponsored conference last week that Asia's online ad market would soon "take off." But she offered no evidence as to why that might be, apart from the U.S. experience, and her constant exhortation that it will. The audience was unconvinced.

Perhaps it's because they are inherently salesman, but the industry seems to think that if you say something loud enough and often enough, that people will believe it be to be true. This week we see DoubleClick's chief executive, Stephen Moss, claiming that online revenues in Asia could double each of the next two years. "We've heard estimates of the Asian market's worth ranging from $1.1 billion to $5 billion by 2004," an enthusiastic Moss told Hong Kong's South China Morning Post newspaper. And then he gave himself away. "For us, we have to believe that the eventual worth will be in the higher end of that range."

Of course they have to think that. Their survival depends on it. In coming months, expect more of this type of talk. But don't expect to see the shares of online advertising companies, and their content partners, to zoom up any time soon. Why? Ask yourself a couple of hard questions. What was the last online ad you can remember? And how many times did you double-click on it?

Eric Ellis is the Southeast Asia and Technology Editor of the regional finance portal AsiaWise.com

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