US Online Ad Budgets To Increase In 2005

Almost half of marketers plan to decrease spending in traditional advertising channels like magazines, direct mail, and newspapers to fund an increase in online ad spending in 2005. According to a new five-year forecast from Forrester Research, Inc. online marketing and advertising will represent 8 percent of total advertising spending in 2010 - rivaling ad spending on cable/satellite TV and radio."Despite significant changes in consumer behavior, there is a large disparity between the amount of time consumers are spending online and the money marketers are spending trying to reach them online - online consumers spend more than one-third of their time online - roughly the same amount of time they spend watching TV. Yet marketers spend only 4 percent of ad budgets online versus 25 percent on TV."
Key data points include:
- Search engine marketing will grow by 33 percent in 2005. Display advertising, which includes traditional banners and sponsorships, will grow at the average rate of 11 percent over the next five years.
- New advertising channels will draw interest and spending from marketers. Sixty-four percent of respondents are interested in advertising on blogs, 57 percent through RSS and 52 percent on mobile devices, including phones and PDAs.
- Marketers are quickly losing confidence in the effectiveness of traditional advertising channels and feel that online channels will become more effective over the next three years.
- The only nondigital advertising channel to reach the same level of confidence as online channels with marketers is product placement - only 8 percent of respondents believe that product placement will become less effective over the next three years.