• by June 19, 2006

Leading marketers believe in the benefits of digital marketing--but are having trouble keeping up with the escalating pace of online advances, according to a survey released last week by the American Advertising Federation. In fact, 63 percent of those surveyed said that Fortune 500 companies are "generally behind the curve when it comes to online ad strategy." And 58 percent said that they personally are "struggling simply to manage existing online efforts, let alone stay ahead of the curve."

Isn't that the truth for all of us?

The study also found that an overwhelming majority of those surveyed recognize the effectiveness of digital marketing, with 91 percent citing the online media environment as "empowering to advertisers, allowing the ad industry to shape its own development." And 42 percent cited online media as offering the highest return on investment of any form of media.

Survey respondents also cited the risks associated with digital marketing, such as advertising on blogs. In fact, 62 percent said that "blogs are too risky to advertise with due to lack of predictability of the editorial content," while only 53 percent agreed with the same statement about user-generated content on sites such as Facebook and MySpace. Despite these concerns, an overwhelming majority said advertisers "should exploit the viral marketing opportunities" of user-generated sites and, to a lesser degree, blogs.

The survey, conducted by Atlantic Media Company, also noted these findings:

• Online video hasn't had a significant impact on ad spending in television network upfront markets; 62 percent of those that participate in TV upfront said online video did not have an effect on their spend with networks, and only 15 percent said online video decreased their network spend.

• Advertising industry leaders forecast bigger ad budgets across online media as a whole. Average spending on online advertising, as a percentage of the total media budget, is anticipated to increase from 15 percent in 2005 to 20 percent in 2006, and forecasted to reach 32 percent by 2010.

• New media platforms will get only a small percentage of online budgets next year, with social media and video getting the top percentage of spend.

• Paid search is set to increase from nine percent of the online budget in 2005 to 11 percent in 2006 and 23 percent in 2010.

• Display advertising is set to increase from 22 percent in 2005 to 28 percent in 2006, but will decrease by over half to 13 percent in 2010.

• Rich media will increase from 11 percent in 2005 to 13 percent in 2006 and 18 percent in 2010.

• According to respondents, the top five most successful digital media campaigns over the last year were 1) Burger King; 2) Apple and Verizon (tie); 4) Volkswagen and 5) Unilever's Axe.