New Zealand behind on online ads

New Zealand has the fifth highest web penetration in the world but is way behind in online advertising, says AltaVista executive Martin Keogh.

In the US 3.5% of total ad spending goes to online, in the UK it's 2% and in Australia 1.5%. In New Zealand the figure is 0.5%.

In a bid to up its share, search engine AltaVista, which is totally dependent on advertising, is producing new forms of online marketing. Keogh, AltaVista's international development and marketing director, was in New Zealand to pitch these new marketing services to advertising agencies.

"Traditionally advertisers buy a key word so that when someone searches for it AltaVista will bring up the advertisers' banner ad. Now, instead of a banner ad, AltaVista offers advertisers the ability to integrate specialist content with search results." According to Keogh, these branded areas are getting a click-through rate of 4% in the UK. Another new service is called the skyscraper - a vertical space down the side of a site, which can be branded and have interactive elements.

Keogh believes websites selling online ads haven't managed to get close enough to ad agencies. In the US this was partly because they didn't have to bother, as dot-com mania pushed up sales figures. "In the US there was such a large amount of money sloshing around it was almost like a land grab. Websites were saying, 'We've got eyeballs', but they weren't looking at the clients' overall marketing objectives."

Keogh says there is a need for greater accountability and creativity from online campaigns, especially now that the US is going through a retrenchment period and New Zealand's rate of growth has slowed. Nevertheless, local online ad spending will increase. According to AltaVista's own research, online spending in New Zealand will grow to just under $A10 million this year, with Australia flattening to around $190 million.

In March AltaVista launched a New Zealand version of its search engine. The local index recently increased to three million sites. Website owners can submit their site but AltaVista recrawls the web every six weeks to add new sites to the index. Keogh says the local version of the search engine is not competing with other local search engines. "For example Access NZ is treated as a business directory. It's doing very nicely and AltaVista isn't going to take away from it."

Meanwhile, AltaVista is being tipped as the next big online business to be put up for sale. Speculation is rife that its cash-strapped US parent, CMGI, is ready to accept an offer for AltaVista or a cash injection from a strategic partner.

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