• by Wendy Davis  @wendyndavis, May 4, 2005

Almost nine out of 10 marketers--84 percent--plan to increase their online ad spending in 2005, according to a new report by Forrester Research released Tuesday. The study, "US Marketing Online Forecast: 2005-2010," was based on a February survey of 99 national marketers, interviews with 20 vendors, and in-depth conversations with Google, Yahoo!, MSN, and America Online.

Overall, Forrester predicted that online advertising would reach $14.7 billion this year--a 23 percent increase over 2004 estimates. By 2010, Web advertising will reach $26 billion, or 8 percent of all advertising spending, predicted the report.

Forrester estimated that search advertising will reach $5.7 billion this year and $11.6 billion by 2010, up from an $4.2 billion in 2004. Display advertising is predicted to hit $4.9 billion this year and $8.1 billion in 2010, up from $4.1 billion in 2004. Forrester concluded that online classifieds will climb from $2.2 billion in 2004 to $2.7 billion this year and $4.7 billion by 2010. And e-mail marketing will reach $1.5 billion this year and $1.7 in 2010, from $1.4 billion last year.

On average, marketers that intend to increase Web advertising say they will do so by 25 percent in 2005, according to the report. Almost half--47 percent--of the marketers planning to increase online advertising say they will fund the move with increased overall advertising budgets. And almost the same proportion--43 percent--say they will decrease spending in other media--especially magazines, direct mail, and newspapers.

Marketers also told Forrester that Internet advertising was more effective than traditional advertising when it came to driving traffic to a Web site, delivering promotions, or generating leads; 91 percent of respondents said Web advertising was more effective for driving traffic, 62 percent said the same for delivering promotions, and 60 percent said online advertising was more effective for generating leads.