Advertising Surge Continues
noteworthy in an otherwise lackluster media environment.
AICPA Custom Media Solutions
Now that the
media environment has cooled off from its torrid pace of the past
several years, Web advertising may finally get more respect. Whether
you’re partial to search, display, sponsorship, podcasts or
Webcasts, marketers are allocating an increasing share of their
budgets — about 15 percent on average — to some form
of digital media because it’s fast to produce, easy to measure
— and it gets results. But, don’t take it from us.
Online Spending Surges 14 percent
spending in the second quarter soared by 13.8 percent from the first
three months of the year, according to a new study conducted by
Deutsche Bank in conjunction with MediaPost. Pricing also increased,
with the cost of premium inventory rising 6.6 percent.
For the report,
39 media executives were questioned earlier this month about their
clients' experiences with Internet advertising in the first quarter,
and expectations for this quarter. This survey, conducted online
by InsightExpress using members of the MediaPost advisory panel,
marks the seventh in an ongoing series of quarterly studies of media
professionals by MediaPost and Deutsche Bank.
About 78 percent
of media executives who responded to the current survey —
collectively they spent over $150 million on Internet advertising
last quarter — reported that their clients spent more on Internet
advertising last quarter than in the first, with 15 percent seeing
increases of more than 30 percent. About 18 percent reported no
change in spending, while three percent said spending declined.
of the respondents (47%) said the cost-per-thousand impressions
for premium inventory were more last quarter than in the first three
months of the year, with 36 percent reporting increases greater
than 10 percent. Forty-seven percent of respondents also said that
pricing for run-of-network inventory had increased, with about nine
percent reporting increases of more than 10 percent.
Predicts 25 percent Surge in Internet Ad Spending Despite Lackluster
Overall Ad Environment
ad industry forecaster, Robert Coen of Universal McCann, revised
his barometer of U.S. Internet ad spending upward late last month,
but was bearish on ad spending overall. Coen, senior vice president
and director of forecasting for Universal McCann, now predicts that
Internet spending — excluding search — will surge to
over $9.7 billion this year, marking a 25 percent increase from
2005. In the first quarter alone, online ad spending grew more than
19 percent from last year, according to Coen. Last December, he
projected that online ad spending for the year would total $8.7
billion, representing a growth rate of just 10 percent.
While the Interactive
Advertising Bureau pegs search as representing about 41 percent
of online ad revenues, Coen routinely excludes search from his calculations
of online ad dollars. Why? He likens search advertising to the slotting
fees that retailers pay to stores to get premium shelf space for
Some other forecasters
have predicted that online ad spending, including search, will total
around $20 billion this year. PQ Media Tuesday pegged this year's
total online ad spend at $19.96 billion—a 26 percent surge
from 2005; TNS Media Intelligence president-CEO Steven Fredericks
also recently estimated
that overall Web ad spending will amount to around $20 billion.
eMarketer forecasts a slightly more conservative $16.7 billion online
ad spend for this year.
predicted ad spending would rise to $286.405 billion, a 5.6 percent
increase from last year; last December, he forecast 5.8 percent
growth. The more pessimistic outlook stems at least partly from
slower-than-expected local growth in the first quarter; newspaper
retail ads were down one percent the first three months of the year,
while spot radio was down two percent and Yellow Pages were "flat
to down," according to Coen's report. Given the softer local
ad market, Coen lowered his local spending forecast 3.1 percent
(to $101 billion) from the previously projected four percent.
Net Ads to Take Lead in Global Growth
Not only are
people spending more time on the Internet and with new wireless
technologies — they'll be turning to these newer platforms
for entertainment and media, too. That's the finding of PricewaterhouseCoopers
(PwC) in its "Global Entertainment and Media Outlook: 2006–2010."
PwC predicted the Internet will be the fastest growing advertising
sector globally, with an 18.1 percent compounded annual growth rate
to hit $51.6 billion by 2010. Net advertising will make up 10 percent
of all ad revenues by 2010, up from less than three percent in 2002.
Plus, global spending on entertainment and media via online and
wireless channels will go from $19 billion in 2005 to $67 billion
by 2010. PwC predicts broadband will go from 187 million households
in '05 to 433 million by '10. "Virtually every segment of the
entertainment and media industry is shifting from physical distribution
to digital distribution of content," said PwC's Wayne Jackson.
"As this shift continues, we see more revenue opportunities
for entertainment and media.”
Online to Reach 9 Percent Share of Ad Spend in 2011
is expected grow to represent nine percent of overall advertising
spending by 2011 according to the latest JupiterResearch forecast,
"U.S. Online Advertising Forecast, 2006 to 2011." The
researchers pegged online advertising to reach $25.9 billion in
revenues by 2011, rising at a compound annual growth rate (CAGR)
of 11 percent over the next five years.
online, which is forecast to reach $9.2 billion in 2011, will be
marked by dramatic growth in certain of its subsets. Rich media
spending is expected to climb at a 21 percent compounded annual
growth rate, while video expenditures are forecast to increase at
a 27 percent CAGR through 2011. Broadband adoption and traditional
advertisers' fondness for the formats are the trend's drivers, according
to Jupiter analysts.
U.S. Marketers Shift Toward Trackable Marketing and Media Efforts
percent of marketing leaders report that they are reducing mass-marketing
budgets in favor of more targeted efforts. This was a key finding
from Epsilon's Business-to-Business Marketing survey with GfK NOP.
The results were released in June by Epsilon, a provider of multi-channel
marketing services, technologies and database solutions, yesterday
at the 2006 DM Days New York Conference & Expo.
GfK NOP, a worldwide
market research organization, conducted the Epsilon Interactive
survey from March 28 to April 4 among a qualified sample of 175
U.S.-based business-to-business marketing executives to understand
their organizations’ 2006 marketing plans, budget allocations,
measurement practices and interest in new technologies and new marketing
The survey also
revealed that although traditional marketing channels —TV,
radio and print — continue to command the largest share of
budgets, the largest spending change among respondents is occurring
in trackable media categories. Today more than half of respondents’
budgets go to trackable media, including channels like direct mail,
e-mail, telemarketing and search, and 79 percent of respondents
report that they are decreasing mass marketing budgets in favor
of more targeted efforts.
than a third, 34 percent, were concerned that their organizations
were not properly structured to execute a coordinated, integrated,
cross-channel marketing campaign. Of those organizations that do
practice cross-channel, integrated marketing, 62 percent, a majority,
reported double-digit lifts in marketing performance, with nearly
one-in-five reporting a lift of greater than 15 percent. The typical
mean reported lift was 11 percent.