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Kandel on Net advertising
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July 14, 2000: 12:12 a.m. ET
Technology advertising boosting media companies but how long will it last?
By CNN Financial Editor Myron Kandel
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NEW YORK (CNNfn) - These are good days for media properties that carry advertising from Internet and other new economy companies. Take the Wall Street Journal, for example. Its parent, Dow Jones & Co., has just reported a blockbuster quarter, with operating earnings up 66 percent from a year ago, led by banner results from its flagship paper. Anyone who takes the Journal knows how fat it's been running - as have other papers and magazines. And, of course, business news programs on television are feasting as well. Ads on the Web are still new, but they're also growing apace. The red-hot pace of the overall economy is adding its own stimulus.
 However, there may be a fly in all that Internet honey. As a shakeout picks up momentum in that industry, the question arises about whether the advertising barrage will continue at its recent rate. Some Web companies that have already filed for bankruptcy protection, or are in danger of doing so, owe substantial media bills, and the numbers crunchers are keeping a wary eye on other potential losses. So earnings reports have to be studied for future projections, as well as past performance.
Jerry Bailey, the chief financial officer of Dow Jones (DJ: Research, Estimates), maintains that ad volume will not decline in the second half of this year, but he concedes that the rate of growth may slow. He says the slowdown in growth began in June, and will continue in July. Bailey noted that technology companies still comprised the biggest portion of advertisers, but ads relating to initial public offerings and business-to-consumer companies were declining. He added, though, that one reason for the slowing of overall growth will be the strength of the comparable months from the year before. In general, he says he expects Internet and other relatively new companies to continue to pursue their aggressive branding efforts.
A sharp increase in ad spending by technology and Internet companies also boosted magazine advertising in June. Those sectors increased their spending by more than half, according to the Publishers Information Bureau, a magazine industry trade group. Total magazine advertising rose by 19.8 percent from a year earlier. That rate was even better than the 17 percent gain for the first half of the year as a whole.
The spending by technology companies skyrocketed by more than 55 percent in June and by just about that much for the first six months. That more than offset a 7.5 percent decline in automotive advertising in June.
So the Internet and other tech advertisers have been giving the media business some solid results to crow about. But industry analysts are watching carefully to see whether that boom has staying power and what happens to the weak sisters among current advertisers. And longer-term, everyone is waiting to see how fast it will take advertising on the Web to reach its full potential. 
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