AdRelevance -- July 17, 2000

An increasingly strong, positive correlation now exists between online retail advertising and the number of engaged visitors to online-only retail sites, according to a new report released today by AdRelevance, a division of Media Metrix (NASDAQ: MMXI) and an innovator in Internet advertising measurement technology. (Engaged visitors are defined as people who spend more time per Web page than the average person - at least three minutes a day - and view more content on retail sites.) The top three visited online retail segments in the month of April - books/music/movies, flowers/gifts/greeting cards and computer hardware and software - show a strong and very positive correlation of 0.83 between advertising impressions and engaged visitors.

Key findings from the latest AdRelevance Intelligence Report, which covers online advertising impressions and online behavior patterns of engaged visitors on retail Web sites between January and May 2000, include:

• Of the top three categories, flowers/gifts/greeting cards had the lowest correlation at 0.78, while the more competitive sectors of books/music/movies and computer hardware and software both show high correlations of 0.82 and 0.87, respectively. (-1 would indicate a perfect negative correlation and 0 would indicate no correlation, while +1 would indicate a perfect positive correlation.)
• Top online-only retailers run regular Internet advertising campaigns amounting to 168 million average monthly impressions.
• Although retail ad impressions declined significantly with NASDAQ's April downturn - falling from 19 percent growth in February to a negative nine percent loss in April - they rebounded in May, showing six percent growth.

"Given the strong connection between online advertising and engaged users and considering the market's need to see increasing profits, online retailers should think twice before deciding to decrease Internet ad budgets in response to NASDAQ's fallout," said Charlie Buchwalter, vice president of media research for the AdRelevance division of Media Metrix. "Despite the trying efforts of many dot coms to build their brands with big-budget television ad campaigns, the latest AdRelevance figures for the online retail sector suggest that money spent on online advertising is growing their businesses."

"Using the AdRelevance Service to find out how much and where online retailers are advertising, our online retailing clients gain invaluable insight for planning Internet marketing campaigns," said Will Hodgman, president of the AdRelevance division and chief marketing officer at Media Metrix. "Companies that advertise without this kind of advertising intelligence are missing the boat. Media Metrix and its AdRelevance division are committed to providing the industry with the most objective, comprehensive and timely data and insights commandeering the New Economy."

According to the Report, some of the well-known online-only retailers such as Amazon.com and eBay, have created a brand name by running regular online ad campaigns consisting of 168 million average monthly impressions (see Table C above). On the other hand, smaller, lesser-known companies - that often struggle with brand identity and differentiation issues - often have little to no online advertising and tend to operate in highly saturated or fragmented categories.

"Many of the more successful online retailers appear committed to online advertising, which they use to both drive traffic and build awareness for their brand," Buchwalter said. "Online retailers that don't quite have the same level of brand recognition, however, can still be competitive using online advertising. In fact, the AdRelevance Report shows that some companies, like Reel.com and PlanetRx, build good traffic using direct marketing impressions. It's a challenge to find the right balance between online branding advertising and online direct marketing - and it will be those businesses that do that will survive the predicted shakeout."

A complete version of this AdRelevance Intelligence Report, titled "The Rise (and Fall?) of Online Retail" can be viewed at www.adrelevance.com and includes compelling ad metric graphs as well as a look at many of the actual ad banners cited within.

Copyright 2000, AdRelevance, from a distributed press release.

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