Behind the Numbers: Web Spending

by Jack Loechner, Jun 24, 2005, 2:15 PM

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Online marketing and advertising will represent 8 percent of all ad spending in 2010, when all Internet spending is expected to almost double to $26 billion, up from an anticipated $14.7 billion this year, according to Forrester Research. In fact, TNS Media Intelligence says the Internet is expected to be the fastest growing ad medium in 2005, up 11.2 percent over last year.

Nearly half of the marketers surveyed by Forrester plan to decrease spending in traditional channels this year to fund other media. Over 75 percent of these marketers feel that traditional advertising channels will become less effective, while search engine marketing will be more effective over the next three years. And 53 percent say TV advertising will be less effective.

Charlene Li, principal analyst, Forrester Research, notes that Internet consumers at home and work spend more than one-third of their time online, about the same amount of time they spend watching TV. Yet marketers spend only 4 percent of ad budgets online, versus 25 percent on TV.

Representing attitudes throughout the marketplace, Greg Stuart, CEO of the Interactive Advertising Bureau, says "interactive advertising has clearly become a mainstream medium and one that can no longer be ignored as a critical piece of any marketing mix." He added that display, search, and classified interactive advertising are on track to surpass consumer magazine revenues.

Tom Hyland, partner and new media group chairman, PricewaterhouseCoopers, says that "more and more, brand marketers will look to interactive as an integral platform to deliver rich experiences for brand building and enhancement." Scott Ferber, CEO and co-founder of Advertising.com, finds that traditional advertisers are more comfortable using the Web for direct response and branding because of more sophisticated targeting strategies, as well as new technologies to measure the effectiveness of their campaigns.

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