US online advertising and marketing expenditure is to predicted to reach $14.7 billion in 2005, with online advertising channels such as search engine marketing, online display adverts and email marketing continuing to become more effective, relative to traditional channels.
According to a new report from Forrester Research, even though online adspend is growing at a rapid rate, marketers may still be underpaying the online channel.
Commenting on the research, Charlene Li, Forrester analyst, said: “There is still a large disparity between the amount of time consumers are spending online and the money marketers are spending trying to reach them online.”
Li continued: “When at-work internet use is taken into consideration, 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% of ad budgets online versus 25% on TV.”
The report also predicts that search engine marketing will grow by 33% in 2005 and is forecast to reach $11.6 billion by 2010, while display advertising is estimated to grow at an average rate of 11% over the next five years, reaching $8 billion by 2010.
New advertiser channels are expected to draw advertiser interest, with Forrester reporting that 64% of respondents are interested in advertising on blogs, 57% through RSS and 52% on mobile devices, including phones and PDAs.
Marketers are shown to be quickly losing confidence in the effectiveness of traditional advertising channels, feeling that online platforms will become more effective over the next three years.
Almost 80% of respondents think search engine marketing will increase in efficiency, with 53% predicting that television advertising will become less effective. The only non-digital advertising channel to reach the same level of confidence as online channels with marketers is product placement, with just 8% of respondents believing that it will become less effective over the next three years.
Earlier this month US analyst, eMarketer, released new forecasts for 2005 advertising expenditure, predicting online advertising to rise by nearly 34% in 2005 to about $13 billion. Paid search is estimated to grow by 40% over the year to $5.4 billion, up from previous estimates of $4.7 billion (see Online Adspend To Hit $13 Billion In 2005).
A report published earlier this year by Jupiter Research predicts US online adspend will reach $16.1 billion by 2009, almost doubling 2004’s figure of $8.4 billion (see US Online Adspend To Reach $16.1 Billion By 2009).
Related Links
