Coming Soon: More Tech Ads

Online advertising of computer hardware and sofware is set to reverse its recent stagnation.

MARCH 30, 2006 – This year, after a two-year hiatus on major announcements, and even with the postponement of Windows Vista until January 2007 – which will only delay another massive spending wave one or two quarters – several new products are coming to market.

“As a share of total online spending, computing products drifted downward, from 20% of all online advertising in 2003 to just 15% in 2005,” says Lisa Phillips, eMarketer Senior Analyst and author of the new report, Technology Marketing: Customer Driven Convergence. Ms Phillips explains that “major changes in platforms and business models and competition with consumer electronics mean that online ad spending by technology companies will once more keep pace with overall online advertising growth”

Traditional technology marketers, PC manufacturers and software publishers, will constitute the second-largest advertising category on the Internet, with spending of $2.3 billion this year.

Online advertising would account for 49% of technology marketing budgets in 2005, according to the “2005 IT Marketing Trends Study” by Bitpipe and TechTarget.

According to the study, both online advertising and online lead generation would gain in percentage of marketing budgets, up three percentage points each, to 21% and 29%, respectively. At the same time, print advertising would show a decline, same with the mix of direct mail, telemarketing and other offline lead generation efforts.

Not just advertising will be affected. The way products and services are marketed and sold is also evolving.

Since there would be no Internet without computers, peripherals and software applications, according to a survey of retailers by and Forrester Research, almost half (48%) of all sales of such products are made online, compared with just 13% of consumer electronics.

“As hardware and software companies partner with Internet publishers and content providers to enter new markets and reach consumers in new ways,” says Ms. Phillips, “a new convergence of the two industries is emerging.”

For instance, software publishers are beginning to shift distribution and pricing in the consumer market. One-time sales or downloads of programs are giving way to “software as a service,” where a monthly or annual subscription fee guarantees constant upgrades and system maintenance from the publisher.

A Harris Interactive poll taken in September 2005 asked 1,174 US adults what factors they considered when acquiring new technology. “Ease of use” ranked first, with 61% of respondents, but “customer service” was a close second, with 58%.

As technology sales move online, offline retailers have countered with customer service. Best Buy now has nearly 12,000 technicians on-call in its PC-service unit, called Geek Squad, according to The Wall Street Journal. CompUSA has some 400 classroom and 20,000 specialists who do house calls.

“What consumers want, when they want it and how they want it is becoming an inescapable reality for technology marketers,” says Ms. Phillips. “Nowhere more so than online.”

Learn about both the opportunities and competitive challenges ahead, read the new eMarketer report, Technology Marketing: Customer Driven Convergence.

About eMarketer

By gathering the latest research and news from over 1,000 sources, eMarketer has established itself as the world’s leading provider of internet and e-business statistics. eMarketer’s Web site is at