Digital Upstages Online

  • by February 26, 2001
Digital Upstages Online

Michael Pastore, Internet News, reported on a new Forrester study that found that, by 2005, traditional US companies will spend $63 billion annually on digital marketing, campaigns that integrate online advertising, promotions, and e-mail strategies, but that doesn't mean the end of the road for Internet-only campaigns.

Online advertising alone will rise to $42 billion worldwide by 2005, according to Forrester's report "Online Advertising Eclipsed." “By 2005, traditional advertisers will embrace it, driving 84 percent of digital marketing,” said Jim Nail, senior analyst at Forrester.

Traditional advertisers will augment budgets for later-cycle activities like promotions and e-mail, the report found, boosting US digital marketing from $11 billion in 2000 to $63 billion in 2005 ---12 % of all marketing dollars. Targeted offers will propel the growth of promotions 42 percent annually, and more than $6 billion will be spent on e-mail marketing in 2005.

Forrester found that traditional offline advertisers will embrace digital marketing in three waves.

- The early movers -- companies that started advertising online before 1999 and include sellers of highly considered products or services like autos and financial services plan to shift 25 percent of the overall marketing budget online over the next five years. They will represent 32 percent of all digital marketing spending by 2005.

- Mainstream advertisers have hung back and waited to see how the market develops. Because this group will be slow to the market, they will spend only 10 percent of their marketing budgets online. However, 10 percent of their hefty marketing budgets will still account for 41 percent of all digital marketing by 2005.

- Manufactures of low-consideration products, such as soft drinks and household cleaners will start to take the Net more seriously in 2002. Because their online budgets represent a lower percentage of the total marketing budget, this group will account for only 11 percent of digital marketing in 2005.

And, Forrester found that:

- Online advertising in Europe will grow ninefold to $6 billion by 2005,

- Online ad spending in the Asia-Pacific region will rise to $4.5 billion in 2005

- Online ad spending in Latin America will continue to grow to $1.2 billion by 2005.

- Online marketing per company, among 59 marketers surveyed, will rise from $550,000 this year to $1 million in 2003.

Read the whole story here.

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