Doomsayers who thought opportunities presented by the Internet for reaching young, affluent Britons would steal market share from traditional forms of advertising have been proved wrong--at least for the moment.

William Reeve, research director at new media firm Fletcher Research, says that revenue spend for advertisements in Britain by online firms flowing into old media will be close to the 40 million pounds ($62 million). But many online brands, particularly portals such as Yahoo! are keen to cut marketing costs by bartering offline advertisements for space on their Websites, or establishing "contra-deals" with other Internet companies tocross-promote their brands in cyberspace, he said.

"They take the view of what have we got that you haven't?" said Reeve. And while some portals are willing to swap space to gain presence, online retailers such as bookseller Amazon.com Inc and the Microsoft-owned travel site Expedia are tending to spend offline to build awareness.

Building brand awareness

"The best way to build credibility of a brand that exists in the ether is in a medium with which the majority of the population feel comfortable," said Ilika Shelley, head of online media at Western International Media, owned by the Interpublic Group of Companies, Inc. She estimated that major sites were spending around 2 million pounds each this year to promote themselves with an 80-20 split in favour of traditional media.

"The majority of people aren't yet using the Internet, so if you are advertising offline, when they do go online, they are already familiar with your brand and will probably seek youout," she added.

Fletcher says that 10 million adults, or 21 per cent of the British population, regularly use the Net, up from 7 million 6 months ago. Her company expects 18 million regular users by the year 2003.

ExciteAtHome Corp's unit Excite UK , an online brand with one of the highest British marketing spends, claims to be the first Internet portal in the country to use television as an advertising medium. Its recent marketing campaign also uses radio, newspaper promotions and ads in about 240 London Underground stations. "It will never be as inexpensive as it is today to build a brand and to build market share," said Evan Rudowski, Excite UK general manager, who estimates 70 per cent of the company's 10 million pound, would be spent offline in 1999, for promotional activities."Every day you wait, the cost goes up and the noise level (from competing brands) increases. Competitors start to add their brands to the mix and suddenly it costs more to sustain the same level ofawareness," he said.

Rudowski said he was targeting "newbies"--people who have only recently gone online--and "intenders"--those who will take the plunge very soon--in order to create the first brand impression in their minds.

He predicted Internet companies' marketing spend would continue to increase as the medium grew. Reeve at Fletcher said he expected Britain to eventually imitate the United States, where big-spending online brands contributed considerably to the advertising market's overall growth last year.

Last month, the US technology news and information Website CNET announced a $100 million multimedia advertising campaign to run across television, radio, print, outdoor and online over the next 18 months.

"Offline is simply better at creating brand awareness," Reeve said, and added, "Online can be better at response, but in some ways it is more like direct mail than advertising."