• by Wendy Davis , Staff Writer @wendyndavis, January 30, 2007

Spending on online advertising will grow 17.9% this year, dwarfing the projected 5.8% growth in overall U.S. ad spending, according to a new report by Outsell, Inc.

Total, online is expected to account for around 20% of all ad dollars, Outsell reports. But before online publishers get too optimistic, they should keep in mind that Outsell includes money spent on marketers' own Web sites in the total.

In fact, Outsell reports that the bulk of online marketing dollars, 58%, will go to marketers' own sites. "Spending on advertisers' own Web sites is usually overlooked in online marketing spending studies," states Outsell, which surveyed 1,010 advertisers for the study. "Publishers must compete for these advertiser dollars by proving that they add unique value that the advertiser cannot replicate on its own."

Why are marketers spending so much on their own sites? One reason is that they believe such sites yield results in terms of branding and lead generation. Seventy-five percent of the surveyed advertisers said their own sites were effective or extremely effective at lead generation. By contrast, just 56% said the same about e-mail campaigns, while 48% of respondents deemed search engines effective or very effective at lead generation. For branding, 81% of respondents said their own Web sites were effective or very effective, compared to e-mail marketing (64%) and search (51%).

But these comparisons are somewhat unfair, because chances are that visitors who go to marketers' sites already know they're interested in companies' product or services. Often, those visitors land on the sites in response to an ad -- search, e-mail, banner or other. And, no matter how effective marketers believe their own sites are, they still have to somehow drive consumers to those sites -- which means they must continue buying ads elsewhere.