We’ve had lots of questions about our numbers for email advertising — $12 billion – being wildly higher than other tracking companies’ numbers. For instance, the Interactive Advertising Bureau, through Price Waterhouse, is reporting less than $500 million for e-mail. Are we nuts?!
If you give me 60 seconds, I’ll tell you a fascinating secret that underlies why many media companies severely underestimate the Internet advertising opportunity – and why those who understand this phenomenon suddenly become empowered to change their companies.
In the legacy media world, it’s very easy to track advertising expenditures. The methodology involves looking at all the revenues from the major daily newspaper in a market, or all the companies that hold FCC broadcast licenses. There are usually three or four TV stations that get all the revenues, so BINGO! there’s how much is being spent on TV. So when you use that methodology to track Internet advertising, you get a handful of “known” entities and – BINGO – there’s your number!
Can anyone name all the companies selling e-mail advertising? More than three?
Here’s the difference with our methodology: We track spending, not revenues. That is, we know from various records and surveys what businesses spend on e-mail advertising, and we calculate from the bottom up. We do the same for all advertising, and our numbers wind up pretty much the same for traditional media, but very different for Internet advertising.
With the Internet, however, you can’t fathom the universe of companies and individuals selling things like email advertising or search advertising or banners. In a lot of cases, they aren’t even companies, but individuals who don’t have business licenses and thus cannot be tracked at all for their “ad revenue” receipts.
The amount advertisers are spending is truly stunning, and much larger than most people imagine. Those who understand the true breadth of opportunity are more likely (in my humble opinion) to get a larger share than those who underestimate it.
