"Most of the company leaders are older than 35," said Charles Zhang, chief executive officer of Nasdaq-listed portal Sohu.com Inc. "They do not even use computers. How can you expect them to understand the advantages of Internet advertising?"

Zhang attributed stagnant demand to domestic entrepreneurs' lack of knowledge about the new advertising form.

However, marketing experts believe Websites lack strategic planning expertise because it is not their core business.

"Website companies are good at technology not marketing strategies," said Duan Peili, interactive marketing director of Ogilvy Public Relations. "So they should concentrate on attracting browsers and leave the rest of the work to professional marketing companies like us."

Online advertising revenue forecast has been revised downward from US$100 million in late winter to US$54 million in January.

In July, the figure was revised again to a mere US$39 million by International Data Corp., a market research firm.

To make up the losses, many domestic Websites are exploring new businesses, including Web solution services, short message services and e-commerce.

"Advertising revenue, which accounted for 95 percent of all revenues in 2000, has been reduced to 77 percent this year," Zhang said. "It will take another year or two for people to gradually accept online advertising."

Doubleclick Inc., a professional online advertising company, said another reason online advertising is not taking off is because people incorrectly assume the click rate is the only value index to online advertising.

"We studied people's perception of online advertisements when they did not click on them," said Zheng Jiaqiang, manager of Doubleclick China. "The results show that online advertising is a very effective method to raise brand awareness."

Doubleclick's conclusion was drawn from the answers of 153,455 people surveyed. The results suggest that more than 50 percent of those surveyed recognize brands after browsing Webpages carrying those brands' online advertisements.

Yahoo! Inc. said coverage of the Internet is still small and online advertising alone will not satisfy clients so it helps organize offline company activities to attract advertisers.

"We are providing offline parties and roadshows, and online advertising space," said David Lu, head of Yahoo! China. "A composite campaign reaches a wider audience."

Marketing service providers disagree. Duan said one of the mistakes Websites made, and continues to make, is excessively expanding their businesses.

"Websites spend too much money and time on weaving a big but feeble business network, hoping it will bring more profit," he said. "But the fact is that no clients really depend on them."

(Eastday.com 09/04/2001)