• by Jack Loechner , Staff Writer @mp_research, August 14, 2001

Digital Marketing Initiatives to top Advertising

According to a new report from Jupiter MediaMetrix, online ad spending in the United States will increase 5% in 2001, but will rebound and grow at a compound rate of 22% over the next five years -- reaching a total of more than $15 billion by 2006. During the same period, Jupiter predicts that spending on digital marketing initiatives such as coupons, promotions and e-mail will surpass that of advertising and reach more than $19 billion.

According to the Jupiter's Internet Advertising Model, online advertising will account for 7% of the total advertising market in 2006, up from 3% in 2001, as the Web audience continues to grow. Additional reasons for growth include: increasing consumer Internet services; technology improvements; more experienced online users; and Internet-driven business-cost savings. According to Jupiter analysts, these consumer-driven trends will be the primary drivers of traditional brand advertisers to the Web.

Digital Marketing/Advertising Spending (Billion $)

  +------+-------------+-----------+  |      |      Online |   Digital |  |      |
Advertising | Marketing |  +------+-------------+-----------+  |      |             |           |  | 2000 |        $5.4 |      $1.5 |  | 2001 |        $5.7 |      $2.0 |  | 2002 |        $6.8 |
$3.7 |  | 2003 |        $8.6 |      $6.2 |  | 2004 |       $10.6 |      $9.5 |  | 2005 |       $12.9 |     $13.8 |  | 2006 |       $15.4 |     $19.3 |  +------+-------------+-----------+

Source: Jupiter Media Metrix

Jupiter found that many of the largest offline ad spenders, particularly those that sell high-consideration, information-intensive products, will also make up the bulk of online spending in the next five years. Financial services companies will account for the most online ad spending by 2006 -- a total of $2.1 billion. Automotive and media companies will be the next largest online ad spenders, accounting for $2 billion and $1.6 billion, respectively.

Supporting the findings from Jupiter that digital marketing will become an increasing part of online budgets, Forrester predicted that by 2005, traditional U.S. companies will spend $63 billion annually on digital marketing, which it defined as multifaceted marketing campaigns that integrate online advertising, promotions and e-mail strategies. While dot-coms accounted for 69% of digital marketing in 2000, Forrester expects traditional advertisers will embrace it by 2005, driving 84% of digital marketing.

Find out more here.