Internet Ad Spend Holds Relatively Steady

The nation’s largest advertisers increased their share of spending on the Internet while simultaneously reducing spending in traditional advertising channels. The ad spend report, released this week by eMarketer, forecasts $21.4 billion in online advertising spending in 2007.

The report observes 68 of the top 100 advertisers, as ranked by TNS Media Intelligence, decreased spending on traditional channels including TV and print, and at the same time those advertisers have increased the share of their budgets going to the Internet.

“When you look at the largest advertisers in the U.S., they are still only putting about 3.5 percent of their total ad budgets online. However there are indications they are moving more online,” said eMarketer Senior Analyst David Hallerman.

Like ad spend reports from other research firms, eMarketer reduced its previous projection of the U.S. Internet spend from $21.7 billion to $21.4 billion in 2007. The online ad spend is expected to reach $42 billion by 2011, with continued growth through that time.

Categories within the online channel are expected to see little movement. “In terms of search, it will remain at about a 40 percent range for a number of years,” said Hallerman. The report finds search will represent 41.1 percent share of online this year, 42 percent in 2008, and is expected to reach 43 percent in 2011.

Display ads, in the form of banners, are forecast to take 21.5 percent of online’s share of spending in 2007, 21.5 percent share next year, and 20.7 percent share in 2011. Rich media spending will hit 6.8 percent this year, 6.7 next year, and back to 6.8 percent in 2011. Dollars spent on rich media are estimated at $775 in 2007. Other categories covered include classified ads, referrals, e-mail, and sponsorship.

Unmeasured dollars reach into the billions, according to Hallerman, due to the money spent by marketers to build corporate Web sites, video, and word-of-mouth type campaigns. He said brand marketers can, in some cases, engage an audience on their Web sites better than paid media. He also points to video posted on corporate Web sites and on video-sharing sites on YouTube. The Dove brand is examples of using viral video to spread a message.

The economic climate has driven mortgage companies and others in the financial sector to pull ad dollars from their budgets. Hallerman said the financial services sector has contributed about 15 percent of the Internet ad spend. Other sectors are taking up some of the slack. Hallerman attributes the uptake to the proven measurability of search, and even with display, where they have an idea of where the impressions are going.

eMarketer reports contain aggregate numbers from other research firms.