Marketers look likely to extend their reach in the online advertising arena in 2006, with a new report from investment bank Credit Suisse claiming that overall online adspend will increase by 32% by the end of year, reaching $14.9 billion.
In a survey of chief marketing officers at Fortune 500 companies, nearly half of those questioned said that they plan to increase their online marketing budgets by 30% this year.
Explaining the rising popularity of online advertising, Heath Terry, research analyst at Credit Suisse, said: “The largest number of survey participants believe that internet advertising methods have the highest perceived return on investment, significantly ahead of any other category.”
Terry continued: “The average consumer spends about 30% of their media time online, that’s why you’re seeing all that catch-up spending.”
These claims are echoed in recent research published by online magazine, Direct, claiming that marketers are shifting their adspend onto the internet, with 60% planning to raise their online advertising expenditure in 2006 (see Marketers Move Adspend Online).
Despite the strong growth expected for online adspend, the overall advertising market still spends just 5% of their budgets online, with Credit Suisse projecting this to rise to 6.5% in 2006.
Terry added: “If their consumers are spending 30% of their media time online, advertisers need to be spending that many dollars online.”
Turning to traditional media, survey respondents said that they expect to spend more on newspaper advertising and less on broadcast and magazines ads in the coming year.
Credit Suisse’s estimates are more optimistic that those of media agency ZenithOptimedia, whose latest forecasts claim that online adspend will take just 4.6% of overall advertising expenditure in 2006, rising to 6.4% in 2008 (see ZenithOptimedia Forecasts Steady Adspend Growth).
In the UK, OPera Media predicts online advertising to continue the strong growth that it has seen recently, with the growth this year at 40% slowing to 35% next year. By 2010, the value of online advertising is projected to reach £2.3 billion, up from £912 million in 2005 (see UK Adspend To Hit £15 Billion By 2010).
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