E-Businesses Plugging Into Power of TV

With an increasing body of research indicating that brand name awareness is a key to success on the Internet, e-businesses are finding that their real challenge is educating the consumer about what products and services are available online.

Accordingly, e-tailers — noting that nearly every American home has at least one television set –are finding that television, the most pervasive medium in the U.S., is proving to be an invaluable tool in increasing consumer awareness.

Last year, e-tailers, online brokerage firms and portals, and other Internet-based businesses spent $323 million (US$) on television advertising, according to Competitive Media Reporting.

In the first half of 1999, these same businesses spent $400 million, and the figure may surpass $1 billion by the end of the year.

How Much Is Too Much?

Industry giants would seem to be the most likely candidates for heavy expenditures in television advertising. For example, drugstore.com, an online pharmacy with an already formidable presence, estimates that each new customer cost its site $63 in the third quarter of this year, a figure that is expected to go up.

Additionally, Amazon.com, arguably one of the great success stories of e-commerce, plans to spend up to $100 million this holiday to retain its substantial market share and to continue to broaden its customer-base.

Meanwhile, upscale department store Nordstrom has launched its most ambitious advertising campaign ever, spending $17 million to promote Nordstromshoes.com.

High Price

Mediasmith, Inc., a San Francisco, California-based agency that plans and buys advertising for Internet businesses, reports that the price of getting started with television advertising can be estimated at $40 to $50 million a year.

However, while the feeding frenzy is at its most active, television networks are at their most creative in attractive e-business advertising. CBS, for example, is offering television time in exchange for stock in selected Internet ventures, and already has equity in 13 companies.

Consumers Offer Divided Attention

Nielsen NetRatings reports that 55 percent of Internet users go to e-commerce sites. However, Nielsen Media Research indicates that media multi-tasking – such as watching television while surfing the Internet — is definitely on the rise.

The proliferation of media research available seems to suggest that media are indeed inter-dependent, and an e-tailer’s best bet might be to honor various media with its ad dollars, with heavy emphasis on the big daddy of them all, television.