UK dot-com ad spending down

Advertising by Internet companies dropping off, says study

Advertising spending by UK dot-com companies has fallen for the first time in years according to figures to be released by media monitoring firm ACNielsen MMS next week.

Figures from ACNielsen MMS will show that for the month of November advertising by dot-coms fell for the first time since it began monitoring the sector. The drop is part of an overall decline in UK advertising spending, evidence that the economy could be slowing down. Nielsen said overall spending rose by 2.8 percent in the year to the end of November, failing to keep up with headline inflation of 3.2 percent.

News of this advertising slump comes when online advertising itself alreadly looking increasingly shaky. Advertisers are losing faith in the profitability of online advertising leaving Internet companies that rely on online advertising in a tight spot.

Jeremy Ridgway, associate director at ACNielsen MMS, says while the downturn does not necessarily mean an impending crisis, it does probably mean less lavish spending by dot-com newcomers. "We're not going to see expensive exotic advertising campaigns where no-one knows what the Web site is," he says. "I wouldn't be pessimistic, it just relects increased caution."

Leading US Internet portal Yahoo! announced Thursday that it expects earnings for 2001 to fall below expectations largely because of weakening online advertising.

Internet advertising agencies have felt the pinch of decreasing advertising revenue. Online sales specialists Real Media announced Wednesday it would axe 10 to 15 staff in the UK as a result of faltering market performance. Fellow Internet advertisers Engage said recently it intends to shed 550 jobs and 24/7 Media has plans to lay off 100 staff in the US.

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