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Surge Continues Despite Tepid Overall Advertising Forecast
marketers to increase budgets in 2007. More dollars shifting online
with experimentation in new technologies.
AICPA Custom Media Solutions
Total U.S. spending on Internet advertising is expected
to reach nearly $20 billion in 2007, according to eMarketer, a widely
cited market research firm. This prediction calls for 19 percent
growth over total digital ad spending in 2006 at a time when overall
U.S. ad spending is expected to grow by just 1.4 percent in 2007.
eMarketer, December 2006
Online Ad Spending (billion dollars)
Merrill Lynch analysts seem to be in agreement with
their new media forecasting colleagues. Expect anemic ad spending
in 2007, Merrill Lynch says in a report issued earlier this month.
The forecast by analyst Lauren Rich Finle charts an ad spend rise
of 2.9 percent (or 2.7 percent excluding direct mail) and to lag
the U.S. economy’s projected 4.5 percent growth rate. In contrast
to Merrill’s predictions, last month, Universal-McCann and
ZenithOptimedia updated their forecasts for 2007 calling for a more
optimistic 4.8 percent and 4.1 percent growth in the U.S., respectively.
Despite those differences, Merrill views “total
consensus” on the outlook for Internet ad spend: the company
expects online spending to increase 22.9 percent — an estimate
Merrill suggests may be conservative. In its last ad spend survey
in early December, media research firm TNS estimated that U.S. ad
spending in Q3 rose 3.8 percent over the same period the year before
— but just below the four percent growth through the first
nine months of 2006.
Business and IT Going Online
look at the business and IT community, they are going online and
that is where they're getting information," said Sandra Lopez,
integrated marketing communications manager at Intel in a BtoB
Online report. "The online environment is becoming more
user-initiated," she added. "We do not want to speak to
the IT community — we want to speak with them and engage them."
Intel's live chat campaign was part of a broader initiative that
included print and a Web
get a big boost in 2007 as B2B marketers increase overall budgets,
shift more dollars to online and try out new technologies, according
to B2B's "2007 Marketing Priorities and Plans"
primary goal next year will be:
- customer acquisition (62.3%) of survey respondents
- brand awareness (19.5%)
- customer retention (11.0%)
- Other goals (7.3%) including new market growth,
product penetration, research and positioning the company as a
BtoB's survey of 569 marketing executives
was conducted online during the last two weeks of November. It found
that nearly two in three respondents plan to increase their budgets
in 2007 and almost 30 percent will maintain them. In last year's
survey regarding plans for 2006, 60.7 percent of marketers said
they planned to increase their marketing budgets; 31.6 percent said
their budgets would remain flat; and 7.7 percent said their budgets
would be lower.
to increase marketing
budgets this year
Of the three
in five marketers who plan to increase their budgets, the biggest
boost will be seen in online marketing, says BtoB Online
— more than 75 percent plan to increase their online budgets
in 2007 compared to 50 percent who plan to increase their investment
in direct mail and 44 percent who plan to increase their investment
"We track how our customers consume business
information closely and have found that they are evolving their
preferences as innovative new capabilities hit the mainstream,"
said Scott Anderson, director of enterprise brand communications
at Hewlett-Packard Co. Beginning last year, HP made a "fairly
significant" shift from traditional broadcast and print advertising
to online marketing, Anderson said. He declined to disclose HP's
marketing budget or specific budget shifts.
HP is now regularly
using Webcasts, online video, blogs, podcasts, RSS and online communities
to launch new products and develop ongoing relationships with customers,
reports BtoB Online.
Media agency ZenithOptimedia predicted online ad
spending will grow seven times faster than offline advertising in
2007. Global Internet ad spending is expected to grow 28.2 percent,
while spending on other media will see 3.9 percent growth. ZenithOptimedia
predicted Internet spending will overtake outdoor advertising this
year and is poised to overtake radio spending in 2009.
WPP Group's GroupM, a London-based media agency,
also predicted 28 percent ad spending growth online in 2007 in its
"This Year Next Year Worldwide" report, while Merrill
Lynch forecasts a 22 percent growth.
Universal McCann's Robert J. Coen, senior VP-director
of forecasting, said U.S. Internet spending will grow 15 percent
While Internet advertising still makes up less than
10 percent of marketers' total budgets, it continues to grow in
total dollars and as a percentage of the total marketing budget.
ZenithOptimedia said the Internet's share of total
ad spending will increase from 5.8 percent this year to 8.6 percent
in 2009. In fact, the Internet already attracts more than 10 percent
of ad spending in Norway, Sweden and the U.K.
GroupM estimates the Internet's share is already
six percent of all global advertising and, if search is included
in that number, it is at least eight percent.
have also weighed in with their own spending forecasts. B2B marketers
said they will increase their advertising and marketing budgets
by an average five percent to 10 percent in 2007, depending on the
industry, according to various studies from several research companies.
In the technology space, according to research company
IDC, companies will increase marketing spending an average 7.5 percent
next year. The forecast comes from IDC's "Tech Marketing Benchmark"
study, which was released in August and was based on interviews
with 95 senior tech marketing executives.
"Tech marketing spending will continue to outpace
global IT spending in 2007," said Michael Gerard, research
director at IDC's CMO Advisory Research.
Web advertising. A high revving engine stuck in
slow moving traffic. How patient will the media climate be? 2007
should be an interesting year.