Buying on Impulse, Not

The Merrill Lynch equities research team recently had more depressing news for newspaper publishers, “projecting an average ad revenue increase of 4.2 percent to 5 percent in each of the first three quarters” of 2005.” An article in Media Daily News quotes the Merrill Lynch analysts as saying that newspapers with online presences are “experiencing strong double-digit gains” in that portion of their business. But “while the success is worth noting the dollar amounts are still small,” the analysts said.

Advertising in non-traditional online media, particularly search engines, continues to be the Big Story. An April 2004 slide presentation from Morgan Stanley analyst Mary Meeker, though somewhat dated, lays out the prevailing assumptions. Slide 63 shows the dominance of keyword search ads among the mix of online offerings, garnering 31 percent of Internet ad dollars, to 22 percent for second-placed banner advertising.

A more recent report from comScore Networks suggests some interesting results about how search ads are used by consumers shopping for computer and electronic products (which Meeker put at upwards of one-third of all online purchases). The report, encapsulated by the Center for Media Research, found that “25 percent of searchers ultimately purchased a consumer electronics or computer product and that an estimated 92 percent of these purchases occurred offline.” (Emphasis added.)

If correct, that finding suggests it may be tough for Web publishers to increase their revenues by collecting transaction fees for completing purchases. If consumers actively shopping for gadgets exhibit a latent buying pattern, it’s tough to believe they’ll click and pay on impulse for other goods.

Tom Abate