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Study: Marketers Shift Ad Spending to Online
Traditional media planners beware: Internet marketers
are after your budgets.
That's according to an extensive new report from Web
researcher Forrester, which says that nearly half of
marketers plan to decrease spending in media such as
magazines, direct mail, and newspapers in order to dial
up more online ad spending in 2005.
The report, “US Online Marketing Forecast: 2005 To 2010”
quizzed 99 national marketing professionals in February
2005, from organizations like AOL, Avenue A|Razorfish,
Comcast, Google, the Internet Advertising Bureau, New
York Times Digital and Yahoo!. The researcher then
conducted in depth interviews with a select group of
respondents.
Based on these surveys and interviews, Forrester is
predicting a 23 percent increase in online ad spending
in 2005, resulting in a $14.7 billion total market.
While that growth figure is lower than eMarketer's
prediction of 34 percent announced earlier in the week,
the bottom line spending total is even larger than
eMarketer's $13 billion figure (the two companies define
various online ad categories differently).
Perhaps more eye-opening is Forrester's forecast that
spending will hit $26 billion in 2010, putting the
medium in the neighborhood of cable and satellite TV and
even the most mature of media, radio.
To keep things in perspective, the marketers in
Forrester's survey are already heavy online spenders,
and 84 percent plan to increase online budgets by an
average of 25 percent. Yet these marketers plan to
increase overall marketing budgets by just 1 percent
this year, suggesting that a large portion of these
online dollars are being apportioned from traditional ad
budgets.
To further illustrate that shift , while 47 percent of
these companies plan to increase their overall ad
budgets to fund the growth, 11 of 18 reported plans to
apportion dollars from magazines, while seven of 11 said
they would siphon dollars from newspapers, and eight of
11 plan to pull funds from direct mail.
Though paid search is seen as a major driver of this
shift toward more spending online, given its strength in
return on investment, brand dollars are clearly making
an impact: two-thirds of marketers surveyed said that
they consider online channels to be just as or more
effective at branding than traditional media. Search
engine marketing is expected to grow by 33 percent in
2005, reaching $11.6 billion by 2010, says Forrester,
while display advertising will grow at the average rate
of 11 percent over the next five years to $8 billion by
2010.
According to Forrester, these brand advertisers are also
likely beginning to recognize the longer term value that
online advertising holds, as more and more consumers
turn to the Internet to research products over time
before making purchases, whether online or offline.
On other fronts, Forrester says that high prices and
tight inventory for premium ad placements, such as
anything running on the homepages of portals MSN, AOL,
and Yahoo, are driving more advertisers to spend on
secondary sites. Consequently, CPMs for portal inventory
are on the way up: several portals have attributed as
much as half of their growth in 2005 to price increases.
As for the various online advertising tactics which are
still "emerging," such as contextual ad placements and
behavioral targeting, Forrester found that marketers are
generally embracing these segments, yet are encountering
inconsistency in both inventory and performance, which
is hindering further growth in spending. |
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