MARKET RESEARCH.

Internet Companies Advertising During The Super Bowl Must Have Thorough Game Plan To Succeed

Some Internet companies expect to become the leaders of the Web as they spend millions of dollars buying 30-second advertising spots during the Super Bowl on Jan. 30. Gartner Group Inc. analysts say Internet companies running TV ads during the Super Bowl can gain some immediate mind share, but it is imperative they have additional advertising revenue budgeted to build a sustainable customer base.

"With a 'game day for splash and sustained advertising for cash' mentality, old world brands have leveraged traditional marketing tools to establish unassailable brands," says Robert Labatt, principal analyst for GartnerGroup's e-Business Intelligence Services. "Brand recognition is what the Internet companies want to achieve. However, these companies must have the dollars to execute a long-term advertising campaign. Frequently, the investment into creating a national brand can exceed $100 million."

Some Internet companies have spent most of their advertising budget for the Super Bowl, hoping these advertisements will create multiple business opportunities and they are hoping this will trigger new investors and partnerships to keep their companies alive. Last year, Monster.com kicked off its advertising campaign during the Super Bowl, and the company experienced a 450 percent increase in unique users in the 24 hours following the Super Bowl. The company continued its ad campaign throughout the year. Monster.com reported the number of visits to its Web site increased from three million per month in January of last year to 10 million per month in December. This translated into a revenue increase from first quarter 1999 to third quarter 1999 of 265 percent over the same period in 1998. The Super Bowl commercial production and airtime represented only nine percent of Monster.com's entire advertising budget for 1999.

Some companies, such as LastMinuteTravel.com and OurBeginnings.com, have limited budgets for sustained marketing campaigns in 2000 and will pursue consumer awareness through targeting niche markets or utilizing "hype" events. Others such as Monster.com and Computer.com want to brand themselves.

All of the Internet companies advertising during the Super Bowl made sure their systems were able to handle the increase of hits on their site after the game. The companies were well aware of the problems that Victoria's Secret experienced last year when its systems could not handle the increased traffic that came to its site after the game.

GartnerGroup analysts will provide additional analysis on the e- business market during the iEC 2000 conference February 29-March 2 at the Jacob K. Javits Convention Center in New York. At iEC 2000, business leaders will convene to learn winning electronic commerce business strategies and solutions. Additional information on the conference is available at http://www.iec- expo.com. More information on GartnerGroup's Electronic Commerce Conference at the iEC conference is available at http://www.tsnn.com/iecexpo/programlist 01.html. Additional information is available on GartnerGroup's Web site http://www.gartner.com/public/static/home/ggebiz.html.

Worldwide PC Market - Compaq Held No. 1 Position

Worldwide; Dell Was No. 1 In United States 

Despite concerns that the year 2000 bug might slow down personal computer sales, the PC market continued to experience robust growth in 1999, according to preliminary statistics by Dataquest Inc., a unit of Gartner Group Inc. Worldwide PC shipments surpassed 113.5 million units in 1999, an increase of 21.7 percent over 1998 shipments.

"There had been concerns that Y2K shutdowns in large business, government and education segments would slow growth in the market in the second half of 1999, but the numbers indicate it had only limited impact on overall growth in the PC industry," says Charles Smulders, principal analyst for Dataquest's Personal Computers Worldwide program. "Our research shows Y2K impacted the PC industry by slowing market growth by approximately two percent in the fourth quarter."

Compaq maintained the No. 1 ranking worldwide with market share above 13 percent. Dell posted the strongest growth rates among the top-tier vendors both worldwide and in the United States with growth rates exceeding 50 percent. Dell moved past Compaq into the No. 1 position in the United States.

Hewlett-Packard, Gateway and Apple also showed double-digit growth rates both worldwide and in the United States. HP's success was driven to a great extent by sales into the home market, where the Pavilion line did extremely well. The launch of new products boosted Apple's growth during the second half of the year. Gateway's growth rate exceeded 30 percent, although the company experienced difficulty with component supply issues during the fourth quarter.

Looking forward to 2000, Dataquest analysts expect the worldwide and US market growth rates will slow by about four percentage points compared to 1999.

"Much will depend on the industry's success in convincing their customers to replace PCs more frequently," says Smulders. "Key factors will be the industry's ability to bring smaller, less complex, cheaper products to the business market and industrially designed products to the home."

Worldwide Business-To-Business E-Commerce To Reach $7.29 Trillion In 2004

Business-to-business (B2B) e-commerce will grow at aggressive rates through 2004, causing fundamental changes to the way businesses do business with each other, according to Gartner Group Inc. The worldwide B2B market is forecast to grow from $145 billion in 1999 to $7.29 trillion in 2004. By 2004, B2B e- commerce will represent seven percent of the forecasted $105 trillion global sales transactions.

"The B2B explosion is imminent, fueled by a combustible mixture of investment financing, IT spending and opportunistic euphoria that is being funneled into start-ups and brick and mortars' e- commerce initiatives," says Leah Knight, principal analyst for GartnerGroup's e-Business Intelligence Services. "Collectively, they will drive short-term economic disruption but long-term business efficiency across industries and geographies."

The catalyst for B2B e-commerce is e-market maker activity. E- market makers are projected to facilitate $2.71 trillion e- commerce sales transactions in 2004, representing 37 percent of the overall B2B market, and 2.6 percent of forecasted worldwide sales transactions. An e-market maker is an organization that develops a B2B, Internet-based, e-marketplace of buyers and sellers within a particular industry, geographic region or affinity group. Among the best-known e-market makers are Chemdex, VerticalNet, Altra Energy Technologies, Paper Exchange, Instill, PlasticsNet and Commerce One's Marketsite.net.

GartnerGroup analysts said e-market makers will have a critical but subtle impact on transactions that flow through brick and mortars' sell-side initiatives. These sell-side initiatives are defined as including extranets, B2B Web storefronts, EDI and flat file transfer over the Internet, and related e-commerce activity allowing a seller to leverage the IP network as a channel to its buyers.

"These brick and mortar sell-side initiatives will fuel the B2B e-commerce fire significantly, as e-market maker valuation envy and Wall Street pressures drive brick and mortars to accelerate sell-side e-commerce adoption," Knight says. "Valuation envy has already sped up e-commerce adoption in the chemicals and electronics components industry, where traditional brick and mortars are under pressure to keep up with fast-moving virtual competitors."

The worldwide B2B market is poised for explosive growth as the market is projected to reach $403 billion in 2000 followed by $953 billion in 2001. In 2001, the market will increase to $2.18 trillion, and at the end of 2003 worldwide B2B revenue is forecast to reach $3.95 trillion.