Online Leads Ad Recovery

  |  September 15, 2004   |  Comments

Marketers are optimistic about 2005 budget increases and they areexpecting to spend more on the Web.

An online advertising recovery is underway, according to Millward Brown's Marketing & Media Snapshot: 2004. The new findings echo those of other researchers, such as those in a recent report by JupiterResearch, a division of this site's parent company.

More than half (56 percent) of the marketers Millward Brown surveyed indicated that their total marketing and media budgets increased in 2004 over 2003, and 60 percent expect the upward trend to continue through 2005. Optimism about budgets swelled, with 81 percent of marketers with budgets above $400 million expecting increases, compared to 44 percent of marketers with budgets under $25 million.

But the news gets even better for online marketing. It is expected to be the chief recipient of the budget increases. The report found that total online spend is expected to increase more than allocations for television, magazines, newspaper, radio, outdoor, and direct mail.

More than half (54 percent) of marketers expected to increase spending for online advertising in 2005, with cable television trailing at 36 percent. Spending on direct mail was expected to increase for 34 percent of marketers, followed by network television at 31 percent.

"When we asked which budgets are going up online was the most but TV was next," said Mary Ann Packo, chief client and marketing officer, Millward Brown, NA. "There is something emotional about TV. It keeps people there even when other logical attributes or elements say otherwise, said Packo, referring to one participant's comment that "TV is the only medium that can make you cry."

Packo also noted that television is still the best medium for creative.

Looking forward, the largest portion (28.2 percent) of survey participants named Web advertising as the online marketing application that would grow the most over the next five years. E-mail marketing was a strong second with 19.2 percent expecting the most growth, followed by search (16.3 percent), online promotions (13.9 percent), and affiliate marketing (9.8 percent).

"It feels like things are moving forward again, especially for the traditional marketer," said Packo. "They all saw and rated the different online marketing applications as very effective."

The Internet scored high marks in its capability to acquire and retain customers, offer efficiency, provide measurable ROI, and ability to reach a targeted audience. Online fell slightly behind network and cable TV and magazines for its effectiveness in contributing to brand equity.

"On the media effectiveness portion, I was kind of surprised at the high scores of effectiveness for online. At least 60 percent said online was 'extremely' or 'very effective' – it rated very highly," said Packo.

The study, sponsored by Advertising.com and iMedia, was conducted in two phases, reaching across industries, budgets and marketing tenure. Technology and financial services had the highest representation; 27 percent had budgets above $400 million; and 25 percent of the respondents had 20 or more years experience in marketing.

"We did background research on what had already been done and then we did some in-depth qualitative one-on-one," said Packo, adding that the survey portion included 292 respondents. "The sample wasn't big enough to drill down by industry but the people were qualified marketing decision-makers who needed to be responsible for the marketing media budget for their company and their brand."

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