Online advertising expenditure looks set to continue expanding its presence in the advertising arena, with a research note from Piper Jaffray claiming that estimates of 24% growth in online adspend for 2006 are likely to prove “conservative”.
The report, from Safa Rashtchy, senior analyst at Piper Jaffray, claims that agencies are facing increasing demand for online adverts among big spending advertisers.
Commenting on the research, Rashtchy said: “The agencies we spoke with indicated that they are seeing the strongest demand from the auto, finance, and entertainment verticals. Additionally, there are early signs that the healthcare/pharmaceutical advertisers are starting to move online in a much bigger way.”
The analyst also predicted that automakers would increase their adspend on online advertising between 50 and 100% in the coming year.
Rashtchy also expects increased demand for online advertising inventory, as well as web analytics and development services, saying: “A number of agencies suggested that the demand for increased web development began about a year ago, and we are at the start of a new web development cycle.”
Taking the above factors into consideration, Rachtchy believes online adspend could drastically outpace the current estimates for online adspend in 2006.
The analyst added: “Based on our recent discussions with advertisers and agencies, we believe the market could grow at 30% plus in 2006, especially as the traditional blend of advertisers increasingly shift their budgets online.”
This opinion is confirmed by research published by online magazine, Direct, which revealed that increasing awareness of online advertising has resulted in marketers shifting their adspend onto online, with 60% planning to raise their online advertising expenditure in 2006 (see Marketers Move Adspend Online).
Investment bank, Credit Suisse, also claims that marketers will extend their reach in the online advertising world in 2006, with a survey of chief marketing officers at Fortune 500 firms showing that nearly half plan to raise their online marketing budgets by 30% this year (see Online Adspend Set To Increase Through 2006).
Credit Suisse expects a similar surge in online advertising expenditure as Piper Jaffray, projecting overall online adspend will increase by 32% in 2006, reaching $14.9 billion by the end of the year.
These estimates are more optimistic than 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).
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