• by Douglas Quenqua , October 12, 2007

Online publishers will need to offer increasingly innovative ways for marketers to reach their audiences if they want to keep their share of ad dollars as new formats such as social media continue to emerge over the next five years, said the author of a new Web marketing report from Forrester Research.

"The U.S. Interactive Marketing Forecast," released this week, paints a picture of an online ad marketplace not only booming in dollars spent--more than $61 billion--by 2012, but becoming more evenly distributed among the many available channels.

The practice of siphoning the lion's share of one's Web ad spending into a single channel--be it email, search or display--will disappear as corporate America aligns its spending with the public's media habits, said the report.

"In years past, interactive marketing spend grew largely due to novelty or from dot-com flame-outs dumping dollars into a single interactive channel--first display ads, then e-mail, and now search," the report said. "But interactive marketing growth over the next five years will be driven by mainstream businesses that embrace the unique value of interactive tools that engage customers in new ways."

For online media, this means keeping pace with innovation to continue to grab a share of an increasingly well-distributed marketing spend.

"This means that publishers have to take the initiative to make media appealing to the more savvy marketer," said Shar VanBoskirk, the study's lead author. "Publishers will have to advance their media as the marketer is advancing to provide the ability to better target ads, provide advanced capabilities and provide richer ad formats."

Web publishers must also think more broadly about their competitive set, said VanBoskirk.

"The social media category is poised to draw significantly [more ad dollars]. More traditional publishers will want to pay attention to and potentially learn from more non-traditional publishers like Facebook to create new formats and types of advertising their customers will want to buy," she said.

Breaking down the various channels, the report predicted that money spent on search marketing in five years will triple to $25 million, due in part to increased competition for cost-per-click inventory.

Display ad spending, which is expected to grow by 26%, will take a "subtle but essential supporting role in all interactive campaigns" thanks to improvements in rich media technology. And email marketing, despite worries about crowded inboxes and irritated consumers, will grow by 18% as marketers focus on increasing relevancy and integration.

The research was compiled through a July 2007 online survey of 344 interactive marketers, as well as in-depth interviews with vendors, media companies and marketers including Facebook, CBS and MySpace.