Digital Marketing To Take 4% Of Budgets By 2008, Says Forrester

The group says that US marketers are planning to increase budgets by 5% in 2004, with many intending to move spend away from direct mail and trade promotions toward digital marketing and websites. Forrester believes that research into the internet’s impact on sales, along with broadband penetration, will have the greatest influence on internet adspend.

The survey of 95 senior marketers from a range of industries, found that 68% are looking to increase budgets next year, by an average of around 5%. The report says that marketers recognise that media fragmentation will require ‘substantial changes’ in the market mix.

When asked what kinds of marketing show the most promise, marketers voiced doubts about print and outdoor advertising, but believe that direct, digital forms of marketing like websites, online ads and email, will grow in effectiveness over the next three years, according to Forrester’s report.

However, while marketers may recognise the value of digital marketing, a lack of robust research that proves online’s effectiveness is stymieing a substantial budget shift toward the web. More than 70% of marketers are still looking for research that proves the Net has both a branding and sales impact relative to other media, says Forrester.

Two-thirds of marketers say that a larger broadband audience would boost online ad spending.

Forecasts Until 2008, digital marketing expenditure is forecast to remain at just 3% of total budgets. Email and search engine marketing are expected to grow at a stronger rate than online display advertising, as shown.

US Digital Marketing Spend Forecasts ($m)
	2003	2004	2005	2006	2007	2008
Email marketing	1,220	1,308	1,393	1,476	1,570	1,668
Search engine marketing	1,916	2,774	3,594	4,372	5,074	5,617
Display advertising	3,836	4,461	5,187	6,179	7,174	8,341
Total digital marketing	6,973	8,543	10,174	12,027	13,817	15,625
% of total marketing	2%	3%	3%	3%	3%	4%
Source: Forrester Research, October 2003