Increase in Ad Spending Predicted

According to the eAdvertising Report by eMarketer, American companies spent $1.5 billion on Internet advertising in 1998. This figure will increase by 73 percent to $2.6 billion by the end of 1999, and to $8.9 billion by 2002, eMarketer found.

The online advertising industry still represents a small fraction of the billions of dollars spent on traditional media such as television, radio, direct mail, and print, which totaled $200.3 billion in 1998. Even by the end of 1999, Web ad revenues of $2.6 billion will account for only 1.2 percent of total ad spending in the US, eMarketer found.

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In the international markets where Web advertising is even less developed, including Europe, Asia, and Latin America, even less money is spent on Web advertising. eMarketer found that only $132 million was spent on Web advertising in Europe in 1998.

eMarketer also found that the rate of online advertising growth will slow in the coming years as the industry stabilizes and advertisers and their agencies experiment with measurement, standards, and ROI.

“In the mad race to build awareness, establish online brands and drive site traffic, Web marketers will continue to divert the majority of their advertising and marketing budgets to offline media and their own corporate Website development,” said eMarketer’s Geoffrey Ramsey. “The brand battle for Web marketers will be waged, not so much on banner ads, but on television sets, radios, and in magazines, as well as on company Web sites where real consumer interaction takes place.”

An earlier report by Simba predicted that Web ad spending would reach $7.1 billion by 2002 after $2.1 billion was spent in 1998. Simba’s report credited increased PC and Internet penetration with driving the rise in ad spending.

eMarketer’s eAdvertising Report is partially based on the estimates and projections on other research firms.

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