US online advertising expenditure is set to increase by as much as 30% in 2005, signalling a strong performance for online advertising for the coming year, according to a recent survey by Deutsche Bank and MediaPost.
This confirms media commentary group, Jack Myers prediction last month, that online would play a major role in advertising growth in 2005, growing by 30% in 2005 (see
Internet Boosts US Adspend For 2005).
The study questioned 100 media executives about their clients’ experiences with internet advertising throughout 2004 and found that clients increased their online spending during the end of year holiday season, with the upward trend expected to continue into the first quarter of 2005.
Jeetil Patel, Deutsche Bank senior analyst said: “There’s a good momentum coming into Q1. Marketers are actually budgeting interactive into their media mix.”
Out of 100 media executives surveyed 8% forecast clients would spend more in the first three months of 2005 than the last three of 2004. Nearly one out of three respondents (27%) predicted their clients would spend between 11-30% more in the first quarter of this year than fourth quarter of 2004.
In addition, 12% of study participants expected their clients’ 2005 Q1 budgets to increase by 30% or more, while 41% predicted spending budgets to grow by 10% in Q1 of this year, compared to Q4 in 2004. Based on a consensus of the sample studied, Deutsche Bank predicts a year-over-lead in internet adspend of up to 30%, a similar percentage increase from 2003 to 2004.
The survey also reported a rise in the cost of inventory for the fourth quarter in 2004, with 10% of respondents saying cost-per-thousand impressions had risen by at least 11%, and 62% citing an increase of 10% or less. An additional 28% said they had experienced a 28% decrease in impressions.
For premium inventory, including spots streaming video, top-layer rich media and full-page arrivals, a steeper financial increase was reported, with 32% of media executives saying that price had increased by 11-50% and 5% saying by at least 30%. Just over half of the respondents (51%) reported a price growth of up to 10%, while only 3% said that premium costs had dropped.
Branding campaigns were found to take more ad dollars than any other form of advertising, with media executives allocating 41.8% of their clients’ money to branded ads. 24.1% was assigned to direct response adverts, 15.3% to paid search, 10.3% to e-mail, 4.9% to affiliate marketing, and 3.6% to other internet advertising.
The largest proportion of online branding dollars went to targeted content sites, such as iVillage, MarketWatch, and CNET with 25% going to Yahoo!, MSN, and AOL. The survey also said that 14% of online dollars were allocated to local TV, newspaper, and media websites and 12% to ad networks.
The media executives questioned expect behavioural targeting and online video ads to be focal points for them and their clients in 2005.
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