Service Providers of the Information Society – Online Advertisement on the Advance

Specialist journals count the Internet among the most frequently used advertising tools in the economic branch of IT-related service providers. About 47 per cent of the companies in this sector promote their products and services online.

The share of companies placing advertising in professional magazines also ranges at approximately 47 per cent. Radio and television, however, are used as advertising channel by only 15 or 20 per cent of the companies. The specialist journals report that in the branches tax consultancy and accounting, management consultancy, architecture, technical consultancy and planning, where advertisement is allowed under the condition that it informs clients about the professional occupation in an objective way, online advertisement also belongs to the most frequently used advertising methods. On a scale from 1 to 5, almost 20 per cent of the companies rate the efficiency of online advertisement relatively high. Only ads in specialist journals are considered to be even more efficient. These are the findings of an economic survey among IT-related service providers conducted by the Centre for European Economic Research (ZEW), Mannheim, in cooperation with Creditreform, Neuss, in September 2006 (further information about the survey at the bottom of the press release).

In addition to other online advertisement, E-mail advertisement in particular plays an important role in the economic sector of IT-related service providers. Almost 40 per cent of the companies using the Internet as an advertising channel work with E-mail advertisement. The so-called keyword marketing (Ad-Words) ranks third. It is applied by about 30 per cent of the companies that use online advertisement. Advertising via banners and pop-ups or pop-unders is used less frequently.

As main reasons for using the Internet for advertisement purposes, the service providers of the information society advertising online firstly name the low costs (approximately 95 per cent) and the reachability of target groups (almost 90 per cent). Only 27 per cent of the IT-related service providers with online advertisement stated that the promotion of traditional distribution channels gave grounds for their decisions. The very exact cost reporting is considered to be a reason for online advertisement by just 20 per cent.

The Internet will remain an important advertising channel for service providers of the information society. Slightly more than 65 per cent of the companies that have been advertising on the Internet confirmed that they will keep marketing products online. More than 20 per cent of these companies even intend to increase their expenses on online advertising, a third of them planning to do so at the expense of another advertising medium. The online advertising trend is also spreading out towards companies that have not yet used any form of online advertisement. About 45 per cent of these enterprises plan to advertise online in the near future.

The business survey by ZEW/Creditreform

About 800 firms participate in this quarterly survey. The economic sector IT-related service providers comprises the Information and Communication Technology (ICT) service providers (firms in the branches of computer service and leasing, ICT-specialised trade as well as telecommunication services) and knowledge intensive service providers (firms in the branches of tax consultancy and accounting, management consultancy, architecture, technical consultancy and planning, research and development as well as advertising).

Remark on the projection

To generate a representative analysis, the ZEW is projecting the answers of the firms participating in the survey with their shares of total turnover realized in the sector of the German IT related service providers.

Contact

Dr. Jenny Meyer, E-mail: meyer@zew.de