Ad Spending: $32 Billion by 2005

Online advertising spending will reach $32 billion in 2005, according to a survey by The Myers Group, which predicts rapid escalation in online spending through 2000.

According to the survey, online spending for 1999 will approach $2 billion. eMarketer has predicted that 1999 expenditures will reach $2.61 billion, while Simba expects $5.5 billion to be spent online in 1999.

The Myers report also predicts that consolidation will hit the Internet advertising industry in 2001, causing a slight slowdown in its growth, but “extraordinary growth” will be seen in 2002 and beyond. According to the report, ad spending across all media will reach $400 billion in 2005, making the Internet’s share of the pie 8 percent.

“Our research shows that online will undergo some growing pains, most notably caused by forces that would commoditize the business and put it in competition with other media, especially network television,” said Jack Myers, chairman of The Myers Group. “But we believe strongly that marketers and their online agencies will be supportive of efforts and initiatives that focus on sponsorships, marketing partnerships, and integrated marketing programs.”

The Myers Group survey was based on a self-administered questionnaire completed by 108 respondents in March and April of 1999. Sixty-two percent of the executives were marketing executives and 38 percent were agency executives.

Factors Considered When
Choosing Online Advertising
Targeting 81%
Brand building 77%
E-commerce 60%
Audience reach 56%
Click rates to
corporate sites
47%
Source: The Myers Group

According to the respondents, targeting is the most important factor they consider when deciding to use online advertising. Targeting was cited by 81 percent of the respondents, followed by brand building (77 percent), e-commerce (60 percent), audience reach (56 percent), and click rates to corporate sites (47 percent).

A majority of the survey’s respondents say they are “neither satisfied nor dissatisfied” (28 percent) or “dissatisfied” (24 percent) with the performance of their online advertising campaigns. According to Myers, this indicates a great opportunity for improvement of services.

Nearly half (49 percent) of the respondents said that integrated media packages including television, radio, and print with online opportunities are important to them. More than half (65 percent) said their company is currently investing in research to measure the effectiveness of their online advertising.

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