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Local Advertisers and Online Newspapers -


















Local Advertisers and Online Newspapers:
Will Print Revenue Streams Reproduce on the Web?

by

Dan Shaver
Michigan State University












Dan Shaver
200 Winterberry Lane
Okemos, MI 48864
(517) 432-1411
(517) 927-7796
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AV Needs: Prefer computer projector for Powerpoint
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 Abstract

Local Advertisers and Online Newspapers:
Will Print Revenue Streams Reproduce on the Web?


        Many newspaper publishers launched online newspapers as companions or supplements to their print publications for strategic reasons, without a well-developed plan for achieving profitability.  Once online, however, economic imperatives have quickly emerged.  A great deal of attention has been focused on the impact of online publications on content and readers, and a good deal of research about web-based advertising has been conducted, but little notice has been given to local advertisers and online newspapers.  This study addresses the question of whether local advertisers, the backbone of support for print newspapers, are likely to become dependable supporters of electronic news products.  It finds that local advertisers have a commitment to a future online presence despite generally negative past experiences, that whether online newspapers or other web-based vehicles capture this business is an open question, and that newspapers are likely to suffer less than broadcast and cabl
e television as advertising budgets are adjusted to pay for online services.
 Local Advertisers and Online Newspapers:
Will Print Revenue Streams Reproduce on the Web?

        Online newspapers are expensive to produce and maintain, but many publishers view them as essential competitive instruments for maintaining their franchise as the primary source of news and advertising information within their markets.[1]
Griswold, in a 1998 survey of 50 newspapers, found that newspapers' initial reasons for going online tended to be more strategic than profit-oriented: 56 percent of respondents indicated their initial reasons were "defensive"; 22 percent indicated a desire simply to establish an online presence and 22 percent cited a desire to "explore possibilities."[2]   Only 11 percent indicated their primary motivation for establishing an online edition was to "make money."[3]
Although most publishers have been initially willing to operate online newspapers at a loss for strategic reasons, ultimately the sites must become profitable if they are to be maintained and developed.  Once online, financial imperatives quickly emerge.[4]
Griswold's survey bears this out.  When identifying present goals for their web sites, 22 percent of online newspaper publishers indicated that "making money" was a key current goal.  Another 28 percent indicated other revenue-related goals such as protecting classified advertising revenue and developing new advertising clients.
Indeed, after only two or three years online, many newspapers are already looking for ways to reduce expenses and operating losses.  By early 1998 most newspapers with unprofitable sites had begun making broad reductions in investments for consumer marketing and audience.  Average annual promotions budgets for newspaper web sites fell from $44,000 in 1996 to $19,950 in 1997, despite the fact that profitable sites reported plans to substantially increase such investment.[5]   Less than one-third of all online newspapers were expected to be profitable in 1999.  One publisher cut to the heart of the matter by posting a message on his site saying, "Unless advertisers begin supporting newspaper web sites, publishers will have to start cutting their losses."[6]
Simply cutting costs, however, is not a solution to the profitability issue.  Finding a solution is made even more difficult by the fact that most newspapers rushed online without a systematic plan for generating revenue.[7]
Publishers must identify viable revenue streams to underwrite their online products if electronic newspapers are to survive and flourish. Web users have demonstrated considerable resistance to paying for access to most sites, with the exception being those offering highly specialized or sexually oriented content.  Transactional revenue, while potentially promising, has been slow to develop because of consumer reluctance and the ability of major branded marketers to bypass the publication environment by establishing independent web sites for shopping transactions.
Advertising, then, remains the most promising economic model -- at least in the short-term -- for Internet publishers.[8]
        For publishers seeking to support online newspapers, local advertisers are particularly important.  They are generally existing customers with whom the newspaper has an established, direct relationship. They already represent the greatest portion of the newspaper's traditional advertising revenue.  Additionally, the competition for their advertising is less intense than competition for major national accounts.
        The purpose of this study was to assess the attitudes of local business online newspaper advertisers regarding the value of their online presence and plans for future commitments to online advertising.  This was done through interviews with the advertising decision-makers for the businesses.
Previous Research
        Although there has been considerable research about the Internet and the world-wide-web, most of it has centered on its capabilities, potential, costs and consumer perceptions and behavior.  The research that has been published on advertiser perceptions and attitudes has generally failed to distinguish between online newspapers and other web-based ad vehicles, and most samples fail to distinguish between local and national advertisers.  The results, therefore, offer limited guidance to publishers trying to develop a realistic business plan for their online products.
Although discussion of the problems of developing profitable online sites is plentiful in such trade journals as Editor and Publisher and Presstime, these articles tend to focus on anecdotal experiences and economic concerns rather than on advertiser research.
Attention to the issue in major journalism/mass communication journals has been scant.  A five-year review of Journalism & Mass Communication Quarterly and Newspaper Research Journal identified only three articles dealing even tangentially with the profitability issue affecting online newspapers and none of the articles included advertiser research.[9]   Not surprisingly, most journalism/mass communication scholars appear to be more focused on the online implications for readers and content than on profitability and marketing issues.
Researchers specializing in marketing and advertising have been more attentive to the problems and potential of online advertising.  Early streams of research focused on issues related to the capabilities and potential of the web for marketing,[10] its growth,[11] and interactivity issues.
More recently, researchers have begun to focus on pricing, measurement and evaluation issues related to Internet advertising.[12]  These studies suggest that questions of audience measurement, effectiveness, and pricing for online advertising are complicated by technological issues, privacy concerns, and the tendency to try to adapt traditional mass media pricing models to a new medium.
Around 1996, an increased emphasis on consumer research emerged, focusing on consumers' perceived value of web advertising,[13]  the utility of traditional mass media advertising in promoting advertiser web sites,[14] and the effectiveness of banner advertising.[15]  These studies suggest that web advertising can have significant value for advertisers.  Consumers were found to be relatively tolerant of the presence of ads, to perceive companies with web addresses as more sophisticated, responsive and customer-oriented than companies without an internet presence, and to develop increased brand awareness as a result of encountering web advertising.
In mid-1997 and 1998, researchers began to explore more carefully the role of Internet advertising in corporate marketing plans and advertiser perceptions of the medium's effectiveness.[16]   Although none of these studies focused specifically on online newspapers or local advertisers, some general conclusions regarding marketers and the web did emerge.
A study of 258 marketers found that companies are consciously incorporating internet advertising into their marketing mix and expect their web presence to grow in the future despite uncertainty among the respondents regarding the medium's ability to provide competitive advantage.[17]
A study of comparative usage of Internet marketing capabilities by 297 large, mid-sized and small firms concluded that larger and smaller firms have been more rapid adopters of web technology than their mid-sized competitors.[18]
In short, the literature reveals little in previous research to provide answers to questions surrounding the long-term viability of the traditional advertising-supported media model for online newspapers.  Journalism/mass communication researchers have paid scant attention to the advertiser issue.  Researchers in advertising and marketing, while probing both consumer and advertiser concerns and responses, have failed to focus on either online newspapers or on purely local advertisers.
Research Questions
The findings of previous researchers that small firms are relatively early adapters of web marketing technology[19] but that marketers are generally uncertain and divided over its value[20] suggest that local advertisers are likely to be relatively receptive to use of online newspapers but may not have the sort of firm, long-term commitment publishers need.
Economic theory suggests an approach for gaining more insight into the issue.  Economically, advertising is a commodity with high substitution potential.    Although various media options are differentiated by audience characteristics (size, age, gender, geography, etc.), advertisers make buying decisions primarily on their perception of which opportunity will result in the greatest response for the least cost.[21]  As perceptions change, so do media choices.  There is no reason to suspect that criterion is less important for online advertisers than for print, broadcast or direct mail users.  Assessing the perceptions of advertisers regarding the relative cost effectiveness of online newspaper advertising compared to other media they use will provide an indication of future commitment and advertising revenue growth potential.
Additionally, the issue of substitution arising from the commodity nature of the advertising market has an important implication for newspapers.  Businesses tend over time to spend essentially the same proportion of their revenues on advertising.  When they expand the number of media used, budgets are normally reallocated with little or no long-term increase in overall advertising expenditures.  If advertisers perceive online advertising to be a cost-effective medium and are committed to its use, from which medium or media will resources be withdrawn?  For an online newspaper publisher, this question is critical.  If online services are being financed by dollars previously budgeted for competing media, the result will be an increased share of the available advertising market.  If such initiatives are financed through a reduction in ROP or classified advertising with the print newspaper, the result will be decreased profitability.
The key research questions, then, are:
1.      Are small and large businesses involved in online newspaper advertising likely to be more receptive to online advertising than medium-sized businesses?
2.      Is there a positive correlation between perceived cost effectiveness of online advertising and the degree of future commitment expressed by the advertiser?
3.      Do online commitments appear to result in advertisers shifting resources from other media and, if so, which media appear to be most affected?
Method:

Online newspapers, for purposes of this analysis, are defined as sites on the world-wide-web that offer news and advertising content and are developed by publishers of print newspapers as an electronic alternative or supplement to their regular product.
Online advertising is defined as banners, links or logos on these sites containing information about retailers or service providers or their products or services for which the site owners charge a fee.[22]
A random sample of 50 online newspapers was drawn from a list of 516 daily newspaper web sites downloaded from the American Journalism Review's September 1998 listing of online newspapers.[23]
Each web site was visited between March 10 and March 28, 1999.  If there were advertisements on the opening home page, the first two advertisers found in a search, beginning at the upper left corner of the page, were selected.  If there were no ads on the opening page, other portions of the site were visited in the following order:  (1) local news, (2) national news, (3) weather, (4) classifieds.  Only local advertisers of non-internet goods and services were selected.  If the site contained no local advertising, it was dropped from the sample and replaced by another randomly selected site from the AJR listing.  The 100 online advertisers thus selected were reordered by use of a random number table and calls were made in order through the list.
Telephone interviews with the individual responsible for online advertising for each business selected were used to gather information about the business, the firm's degree of experience in online advertising, the level of satisfaction with the results, expectations about future advertising, and the impact of online expenditures on budgets for other media.
Because the number of questions were limited to improve the response rate, this study does not provide details about the experiences shaping advertisers' perceptions of online newspaper advertising or permit highly specific conclusions regarding potential revenue shifts.  This represents an area for further study.
When the advertising decision-maker could not be reached, another business was substituted.  Only three advertisers refused to participate.


Results
The final sample contained 50 local businesses of various sizes.  Interview data was obtained from all 50 businesses, though one business declined to provide information regarding its advertising budget and media allocations.  Questions involving budgets, therefore, have an n of 49.  Table 1 shows the key characteristics of the responding enterprises. The variety of business types, sizes, advertising budgets and experience online appears to be broad enough to fairly represent the major categories of local advertising.
Table 1:  Characteristics of Responding Local Advertisers

Business Type:
Retail/Specialty Store
20%
Financial/Insurance
10%
Automotive Sales
18%
Resort/Restaurant
  6%
Business Services
  4%
Real Estate
14%
Health Care
  6%
Personal Services
  2%
Education
  8%
Other
12%
Advertising Budget Size:
Under $2,500 per month
35%
$2,501 - $10,000 per month
29%
$10,001 - $25,000 per month
16%
 More than $25,000 per month
20%
Number of Employees:
10 or fewer employees
28%
11-50 employees
28%
51- 200 employees
22%
More than 200 employees
22%
 Table 1:  Characteristics of Responding Local Advertisers (Continued)

Time Advertising Online:
Less than 3 months
14%
More than 3 months but less than 6 months
14%
More than 6 months but less than 12 months
22%
More than 12 months but less than 24 months
26%
24 months or more
24%

The survey revealed a strong expectation on the part of these local advertisers that at least a portion of their future lies online despite a general lack of success with online advertising in the past.  And, that expectation appears to grow stronger as the time frame lengthens.  While 14 percent of respondents thought it unlikely that they would be online in six months compared to 82 percent who thought it was likely,[24] only 12 percent expect to be offline in one year and only 6 percent don't expect to have an online presence in five years.
Based on respondent comments, there appear to be several factors contributing to this pattern.  Several advertisers expressed dissatisfaction with their current online vendor and said they expect to cancel when their current contract expires but will return online sometime in the future.  Other advertisers said they feel the online market has not yet developed sufficient mass for their advertising to be effective but will in the future.  Many of these advertisers, as well as those expecting a continued online presence in the short-term, expressed the belief that competition and the rapid growth of online marketing will force them to have an online presence.
Of the 94 percent of respondents who said they expect a long-term presence on the internet, 80 percent indicated they expect to increase their presence over current levels, 10 percent said they expect their level of representation to remain unchanged, and only 4 percent anticipate decreasing their degree of online presence.
This optimism regarding the future of online is somewhat puzzling given advertiser experiences with their online presence.  Of 50 respondents, 48 percent rated past responses to their online advertising negatively and only 20 percent gave previous response experience a positive rating.[25]
Research Question 1: Are small and large businesses involved in online newspaper advertising likely to be more receptive to online advertising than medium-sized businesses?
        The initial analysis involved the use of two indexes, one indicating relative receptivity to online advertising and the second representing company size.[26]  Bivariate correlation analysis indicated a significant relationship between the indexes[27] so the independent indexes were broken into their component parts for further analysis.  The following relationships were identified:
ù       Advertising budget size and number of employees are positively correlated.[28]
ù       Advertising budget size and expectations regarding a future presence online are positively related. Regression analysis indicates that the size of advertising budgets explains nearly 13 percent of the variance in expectations regarding a future online presence.[29]
        To determine whether the hypothesis that small and large businesses are more receptive to online services than mid-sized businesses, the sample was broken into three groups based on employment size and the tests were repeated.
        The results support that portion of the hypothesis related to larger firms but a stronger affinity for online among smaller firms than among mid-sized firms is not supported.[30]  This result may be an artifact of the sampling method. Since only companies with an existing online presence were surveyed, those most reluctant to embrace online services were effectively eliminated from the sample.  Further research with a sample containing both online advertisers and non-advertisers is needed on this issue.
Research Question 2:  Is there a positive correlation between perceived cost effectiveness of online advertising and the degree of future commitment expressed by the advertiser?
        Initial analysis compared two indexes representing the advertisers' expectations regarding future online involvement with current perceptions regarding online advertising.[31]
 Bivariate correlation analysis found no significant relationship between the two indexes.[32]
   Further comparisons were made between the individual factors within the indexes.  Table 2 illustrates the results.

Table 2: Relationship of Advertiser Perceptions to Online Commitment
Z score of expected level of future online presence
Z score of future online presence
Z score regarding perceived cost effectiveness
Pearson = -.014,
n=50, p=.926
Pearson = .072,
n=50, p=.618
Z score of level of satisfaction with current online results
Pearson = .035,
n=50, p=.810
Pearson = .466,*
n=50, p=.001
Z score of perceptions of effectiveness of online in reaching target audiences
Pearson = .080,
n=50, p=.579
Pearson = .530,* n=50, p<.001
* Relationship is significant.

        The data suggest that perceived effectiveness in reaching target audiences and satisfaction with levels of current online results are positively correlated with the expectation of an online presence five years in the future.  None of the measures of current satisfaction with online advertising correlate with expectations of increasing or decreasing the investment in online advertising in the future.  And, the relationship between perceived cost effectiveness and continued online presence is not supported.  This result, like the inconsistency between expected online presence and satisfaction with past online experiences noted above, suggests that perceived strategic, competitive, or other factors may be driving expected online investment rather than happiness with the medium itself.
Research Question 3:  Do online commitments appear to result in advertisers shifting resources from other media and, if so, which media appear to be most affected?
        Respondents were asked to rate their expectations regarding the impact of online advertising on budgets for other media using a scale of 1 to 5 where 3 represented no change, numbers below 3 represented a reduction, and numbers above 3 represented an increase.  Table 3 illustrates the results.
Table 3: Expectations Regarding Online Impact on Budgets for Other Media
Mean
Variance
Television Advertising
1.600
2.163
Cable Advertising
1.5800
2.208
Radio Advertising
2.3600
1.378
Direct Mail Advertising
2.3600
1.378
Newspaper Advertising
2.6600
0.800
Other Advertising
1.7200
1.961

While respondents indicate that all media can expect to see reductions in advertising revenues to offset new online advertising investment, newspapers appear likely to see the smallest reductions.  Radio and direct mail advertising appear nearly as strong as newspapers, although the variability of responses for those media was nearly twice that of newspapers, indicating less of a consensus among the respondents.  Cable and broadcast television appear to be the largest losers.
        In part, these findings may reflect the presence of a significant percentage of small advertisers in the sample.  With 64 percent of the sample having advertising budgets under $10,000 per months, the amount of television advertising currently being used is limited and perceived cost effectiveness is not strong.
        At the same time, these are characteristics common to many local retail advertisers and imply that online vehicles may possess many of the perceived advantages that attract them to print.
Conclusions
        This study provides a mixed picture regarding local companies and online advertising, identifying a number of questions for future research.  Because all the advertisers sampled had at least limited online advertising experience, no conclusions can be drawn about non-online advertisers.
        The results provide support for previous findings that larger companies tend to be more receptive to online ventures than mid-sized companies but failed to identify a difference between mid-sized and small companies, providing only partial support for the first research question.  This warrants further investigation since the level of receptivity to online advertising among small firms is closely related to their suitability as a revenue source for online newspapers.
        Support was not found for a connection between perceived cost effectiveness and the degree of advertiser commitment to an online future postulated in research question 2.  Expectations regarding a long-term commitment to online advertising appear to derive from competitive or other factors rather than simple economic issues.  This finding raises several questions:
ù       If the advertiser commitment to an online presence is not based on a cost/benefit analysis, how stable is it likely to be over time?
ù       What perceptions/issues are in fact shaping this perceived commitment to a long-term online presence?  How can online publishers tailor their services and sales presentations to more effectively appeal to these perceptions and motivations?
        Finally, with regard to research question 3, while it appears that advertisers expect their overall advertising budgets for other media to decrease as their online commitment grow, newspapers, radio and direct mail appear to be in for the smallest decreases while broadcast and cable television appear likely to suffer most.
        It is interesting that these anticipated reductions in media budgets directly reflect advertiser rankings of the relative cost effectiveness of non-online media and the allocations of the advertisers' present media budgets.[33]  The logic behind the reallocation of resources to pay for online advertising appears consistent with the research cited in research question 3 regarding the relationship of media choice and perceived cost effectiveness.   That decisions about other media investment appear to be based on perceived cost effectiveness while online investment doesn't, strengthens the conclusion that nontraditional decision factors are driving online investment.  It also suggests that more research is needed to assess the real role of cost considerations in online advertising decisions.
        The overall picture is a mixed one for online publishers.  While it appears that small, local advertisers are strong candidates for future online services, whether they buy those services from their local newspaper or another provider will depend on the quality of service, range of options, and competitiveness of cost offered.  These advertisers do appear to be a significant potential revenue stream for online newspapers.  If newspaper publishers are successful in leveraging their existing relationships to woo these advertisers to their sites, the additional electronic revenue should more than offset any print decreases and result in capturing a larger portion of total advertising revenue from their market.  If they fail, total revenues are likely to decline.
        Online advertisers are clearly committed to the medium in the long term, despite poor past experiences and for reasons not clearly based on a cost/benefit analysis.  Publishers must better understand this reasoning and find ways to incorporate it into their marketing plans or a potentially lucrative revenue stream may be lost to other online options.


[1] NOTES:

 In 1993, John Morton advised publishers: "That investments in electronic delivery systems likely will not offer a return in profit for a lengthy period should not deter newspapers' commitment.  Rather, the investments should be viewed as strategic -- money spent to reinforce the newspaper franchise as the dominant supplier of news and price-and-item advertising against the day when competing systems become ubiquitous."  See John Morton, Growth of Electronic Media Has Made Newspapers Better. Newspaper Research Journal, 2, 1993, pp. 18-22.

[2]  Amy Griswold, Newspapers online: finding new direction? Unpublished Research Paper, 1999. University of North Carolina - Chapel Hill.

[3]  Some respondents indicated more than one reason for establishing an online presence and for their current operations.

[4]  As Michael Erlindson predicted in 1995: "Traditional newspapers are publishing online because they have little choice. . . . [But] once a newspaper establishes; its online product it has to come up with a way of paying for it."  See M. Erlindson, Online Newspapers: The Newspaper Industry's Dive into Cyberspace.  University of Western Ontario, 1995.

[5]  See Successful Sites Emphasize Consumer Marketing, Measurement.  MINS New Media Report, 4, 1998.

[6]  E. K. Meyer, An Unexpectedly Wider Web for the World's Newspapers.  American Journalism Review Web Site (http://arj.newslink.org/emcoll0.html), accessed February 18, 1999.

[7]  C. Harper, Online Newspapers: Going Somewhere or Going Nowhere?  Newspaper Research Journal, 17, 1996, pp. 2-13.

[8]  S. C. McDonald, The Once and Future Web: Scenarios for Advertisers.  Journal of Advertising Research, 37 (2), 1997, pp. 21-28.

[9]  See C. Harper, Online Newspapers: Going Somewhere or Going Nowhere?  Newspaper Research Journal, 17, 1996, pp. 2-13.  John Morton, Growth of Electronic Media Has Made Newspapers Better.  Newspaper Research Journal, 14, 1993, pp. 18-22.  J. Mueller and D. Kamerer, Reader Preference for Electronic Newspapers.  Newspaper Research Journal, 16, 1995, pp. 2-13.

[10]  See R. D. Blattberg and J. Deighton, Interactive Marketing: Exploring the Age of Addressability.  Sloan Management Review, 33, 1991, pp. 5-14.  A. Glossbrenner and E. Glossbrenner, Making Money on the Internet, New York: McGraw-Hill, 1995.

[11]  A. Kantor and M. Neubarth, Off the Charts: How Big Is the Internet?  How Many People Use It?  What Do We Know About Them?  How Much Commerce Is Being Conducted Online?  Internet World, December 1996.

[12]  See A. Day, A Model for Monitoring Web Site Effectiveness.  Internet Research: Electronic Networking Applications and Policy, 7, 1997, pp. 109-115.  X. Dreze and F. Zufryden, Testing Web Site Design and Promotional Content.  Journal of Advertising Research, 37, pp. 77-86.  E. Ephron, Or Is It an Elephant?  Stretching Our Minds for a New Web Pricing Model.  Journal of Advertising Research, 37, 1997, pp. 96-99.

[13]  R. H. Ducoffe, Advertising Value and Advertising on the Web.  Journal of Advertising Research, 36, 1996, pp. 21-35.

[14]  L. M. Maddox and D. Mehta, The Role and Effect of Web Addresses in Advertising.  Journal of Advertising Research, 37, 1997, pp. 47-59.

[15]  R. Briggs and N. Hollis, Advertising on the Web: Is There Response Before Click-Through?  Journal of Advertising Research, 37, 1997, pp. 33-45.

[16]  See H. Bell and N. K. H. Tang, The Effectiveness of Commercial Internet Web Sites: A User's Perspective.  Internet Research:  Electronic Networking Applications and Policy, 8, 1998, pp. 219-228.  A. Feher and E. Towell, Business Use of the Internet.  Internet Research: Electronic Networking Applications and Policy, 7, 1997, pp. 195-200.  P. J. Haynes, R. C. Becherer and M. M. Helms, Small and Mid-Sized Businesses and Internet Use: Unrealized Potential?  Internet Research: Electronic Networking Applications and Policy, 8, 1998, pp. 229-235.  P. Herbig and B. Hale, Internet: The Marketing Challenge of the Twentieth Century.  Internet Research: Electronic Networking Applications and Policy, 7, 1997, pp. 95-100.  C. Soh, Q. Y. Mah, F. J. Gan, D. Chew and E. Reid, The Use of the Internet for Business:  The Experience of Early Adopters in Singapore.  Internet Research: Electronic Networking Applications and Policy, 7, 1997, pp. 217-228.

[17]  A. J. Bush, V. Bush and S. Harris, Advertiser Perceptions of the Internet as a Marketing Communications Tool.  Journal of Advertising Research, 38, 1998, 17-27.

[18]  P. J. Haynes, R. C. Becherer and M. M. Helms, Small and Mid-Sized Businesses and Internet Use: Unrealized Potential?  Internet Research: Electronic Networking Applications and Policy, 8, 1998, pp. 229-235.

[19]  Ibid.

[20]  Bush et al.,  Advertiser Perceptions.

[21]  See C. H. Sandage, V. Fryburger and K. Rotzoll, Advertising Theory and Practice (10th ed.(), Homewood, IL: Richard D. Irwin, Inc, 1979.  D. Shaver, Retail/Display Advertising Rate Study - The Charlotte Observer. Unpublished MBA Thesis, 1993, Wake Forest University, Winston-Salem, N.C.

[22]  P. J. Dowling, T. J. Kuegler and J. O. Testerman, Web Advertising and Marketing, Rocklin, CA: Prima Publishing, 1996.

[23]  The list was downloaded from http://ajr.newslink.org/emcol10.html on February 14, 1999.

[24]  Four percent were uncertain about their likely online status six months from the interview.

[25]  Thirty-two percent of respondents gave a neutral -- neither good nor bad -- rating to previous advertising response rates.

[26]  The relative receptivity to online advertising index was constructed from the z (standardized) scores for the  variables representing length of time online, expectations regarding being online in the future, and expectations regarding future changes in the level of the advertiser's web presence.  The company size index consisted of z scores for variables related to the size of the firm's advertising budget and the number of employees.

[27]  Pearson Correlation = .338, p=.018, n=49 and Spearman's rho =.357, p=.012, n=49.

[28]  Pearson correlation = .410, p=.003, n=49.

[29]  Pearson correlation = .360, p=.011, n=49. Regression: p=.011, R Squared = .129, n=49.
28 Firms with 30 or fewer employees showed no significant correlation between company size and online receptivity (Pearson = .072, p=.75, n=22).  Neither was there a correlation between online commitment and budget size (Pearson = .102, p=.65, n=22).  Firms with 31 to 90 employees likewise showed a non-significant correlation for company size to online receptivity (Pearson = .333, p=.381, n=9) and for online commitment to ad budget size (Pearson = .168, p=.665, n=9).  Only large firms (more than 90 employees) showed statistically significant relationships  between company size and online receptivity  (Pearson = .530, p=.024, n=18) and between online commitment and ad budget size (Pearson = .510, p=.03, n=18).
[30]
[31]  The first index consisted of factors related to the advertisers' expectations regarding remaining online in the future and whether their online presence will increase, diminish, or remain the same.  The second consisted of factors related to the advertiser's current level of satisfaction regarding their online advertising, their perceptions of its effectiveness in reaching target audiences, and the perceived general cost effectiveness of online advertising.

[32]  Pearson = -.087, p=.549; Spearman's rho = -.058, p=.690.
[33]  Asked to rank competing media in terms of cost effectiveness (1 = not cost effective, 5 = very cost effective) and to provide the proportion of their existing advertising budget devoted to each medium, respondents indicated:
        Medium                  Mean Cost Effectiveness         Mean Budget Percentage
        Television                      1.26                            6.6%
        Cable                           1.26                            3.0%
        Radio                           2.39                                17.3%
        Direct Mail                     2.45                                12.7%
        Newspaper                       3.37                                40.0%
        Online                          2.92                                 11.6%