• by Joe Mandese  @mp_joemandese, November 4, 2004

Online advertising is making significant inroads into the media mix, now accounting for about 8 percent of overall ad spending among major marketers, according to the 2004 edition of an annual survey of ad industry leaders released Thursday by the American Advertising Federation. The survey, which was conducted in collaboration with Atlantic Media Co., also projected that online would rise to a 17 percent share of the ad budgets of major marketers within three years. It also found that many ad industry leaders no longer consider it a new medium, but part of the "traditional" media mix.

Percentage of Media Budget Allocated to Online Ads*

2001:   5.25%   
2004:   8.35%   
2007:  17.00%   

Source: American Advertising Federation Survey of Industry Leaders on Advertising Trends. Prepared by Atlantic Media Co. November 2004. *Average of all respondents. Base = 121.

"Is online advertising now considered traditional?" asked one advertiser participating in the survey.

"People are starting to talk about it as if it were part of traditional media," acknowledged Kevin Roberts, CEO Worldwide at Saatchi & Saatchi, who moderated a panel discussion of industry leaders Thursday morning, which was hosted by the AAF at the offices of USA Today in New York (see related story in today's MediaDailyNews).

In fact, in a section of the report subtitled "The Gradual Insinuation of Online Advertising," one agency respondent noted that online already is an integrated part of his shop's media strategy.

"[We use online advertising] mainly in three ways: 1) Extend a brand message via roadblocks that garner attention for a television communication and drive people to our Web site to view; 2) Deliver relevant product facts in shopping sites and encourage consumers to compare our product to the competition; 3) Via contact marketing in order to establish an opt-in relationship with consumers and offer them exclusive content, offers, and other information."

One thing online media purveyors shouldn't expect to become integrated any time soon is some of the more controversial online advertising applications that fall under the banner of either "adware" or "spyware." The study found a notable distaste among ad industry leaders for utilizing such forms of online advertising, which are even now the subject of potential legislation and litigation.

Nearly two-thirds of the ad execs said they were opposed--41 percent "strongly"--to employing "adware- or spyware-supported advertising tactics." Only 12 percent were "somewhat supportive" of such methods.

Use of Adware- or Spyware-Supported Advertising Tactics

Strongly opposed:   41%   
Somewhat opposed:   19%   
Somewhat supportive:  12%   
Strongly supportive:  0%   
Don't know:      29%   

Source: American Advertising Federation Survey of Industry Leaders on Advertising Trends. Prepared by Atlantic Media Co. November 2004. Base = 121.

The No. 1 benefit of online advertising cited by the respondents was its "ability to complement and enhance the use of traditional media," followed by online's ability to more precisely target fragmented audiences.

Online media also were deemed to have an ability to demonstrate a "return on investment," although there were some mixed views among respondents who were asked whether new online advertising formats "can break through the clutter and grab attention." Sixty-two percent of the survey respondents said they agreed with the clutter-busting ability of new online advertising formats, while 37 percent said they disagreed.