The US is set to a see a substantial shift in national advertising moving to the internet in 2005, with analysts Merrill Lynch predicting that online adspend will increase by 19% in the coming year.
A recent survey of 15 national newspaper advertisers by Merrill, has highlighted their increasing reluctance to pay higher ad rates for newspapers, given the declining circulation trends. National advertising produced only an estimated 18% of newspaper ad revenues in 2004, according to the analysts.
The majority of these national advertisers were shifting from print and TV towards cable and internet advertising, at a faster rate than previously estimated by Merrill, with forecasts for internet advertising representing 3.7% of total adspend in the US during 2004.
The growing interest in non-traditional advertising and marketing, such as online, direct marketing, sales promotion and branded entertainment looks set to continue throughout 2005. The latest Bellwether Report released by the Institute of Practitioners in Advertising (IPA) confirms Merrill’s prediction, suggesting that the increase in UK marketing expenditures will be at its highest rate in 2005 since 2000 (see Q4 Bellwether: UK Marketing Budgets Continue To Rise).
On average Merrill expects ad expenditure to increase by 4.6% (excluding direct mail) in the US during 2005, but at a modestly lower rate than in 2004.
Merrill Lynch is currently estimating that online advertising in the US will reach $9.7 billion in 2004, followed by 19% growth in 2005, representing 4.2% of US ad expenditure, up from 3.7% in 2004. It is also expected that online will rise as a proportion of total US advertising, and globally, faster than initially expected.
Related Links
