US advertising will grow 5.8% in 2007, according to the second annual report on ad spending from Outsell Inc.
The study of US advertisers, who control about $6.5 billion of spending, shows that companies plan to increase their online spending by 18% this year, faster than for any other major media type.
Advertisers also plan to raise their spending for advertising on search engines by 39%, the fastest of any online media method.
Outsell fielded a web-based survey of 1,010 advertisers and looked at five media types: online, print, events, TV/radio/movies, and other.
Print, while still the largest recipient of ad dollars (40%), will continue to lose share as online’s share grows to 20%. Outsell says that this is a major milestone for online advertising.
Advertisers’ share of online spending for pay-per-click (PPC) ads will fall 1% in 2007, while cost-per-action ads’ share will grow 8% and online sponsorships’ share will rise 12%.
Click fraud concerns are a driver in PPC’s drop in share says Outsell. 49% of advertisers have reduced or plan to reduce their PPC spending because of click fraud, up from 37% when Outsell first surveyed advertisers on this issue in the Spring of 2006.
Advertisers also rate their own web sites and e-mail marketing more effective than search engine ads, additional drivers in PPC’s slowdown.
Advertisers rate online advertising very effective for branding, contrary to common wisdom that online shines at leads but is weak for branding.
In addition, Outsell says that the share of TV/radio/movie ad spending will decline about 3.5% this year.
A recent report from TNS Media Intelligence total US advertising spending is expected to increase 2.6% in 2007 to $153.7 billion (see US Adspend To Grow To 2.6% In 2007).
Meanwhile, the Jack Myers Business Report, released in December, predicted that total US advertising spending in 2007 will grow only 3.7% (see US Adspend Forecast To Increase 3.7% In 2007).
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