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Research Center >> January 2007 Online
Surge Continues Despite Tepid Overall Advertising Forecast 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.
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 "If you 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 site. Marketing will 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" survey. B2B marketers' primary goal next year will be:
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.
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 in events. "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. More Predictions 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 next year. 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. B2B marketers 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. |
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