Report: Online Ad Spending Growth to Vary by Industry

Online ad spending will continue to grow, but the rate and the type of buys an advertiser makes will vary considerably by industry categories, according to a new JupiterResearch report.

“Agencies and publishers must educate themselves on how industry categories prioritize online advertising and tailor their pitches to different industries,” said Zia Wigder, VP and research director at JupiterResearch. “Growing categories differ in the way they allocate funds to online advertising from their total spending.”

JupiterResearch forecasts online display and search advertising spending will grow at an average annual rate of 10 percent between 2005 and 2010, reaching $15 billion in 2010. Telecom, media and entertainment, and finance make up nearly half of all online display and search advertising spending today. Media and entertainment at $3.2 billion, and finance at $2.3 billion, are expected to keep the top spots by 2010. Telecom will be outpaced by automotive, which will grow from $0.3 billion today to $1.4 billion by 2010.

Some industry categories that don’t currently spend online substantially, such as health and automotive, are expected to increase ad spend primarily in paid search. Meanwhile, consumer packaged goods (CPG) companies are driven by a focus on branding. Those companies are expected to put their budgets into display ads, which will make up 83 percent of their online advertising budgets in 2010, Wigder said.

Overall growth in spending will be driven by better targeting, improved tracking and performance tools leading to refined strategies, and growing consumer penetration of broadband access, according to Wigder.

“A better ability to target consumers will raise marketer incentives to invest in online advertising. Moreover, tools for tracking and performance are starting to provide marketers a scorecard of effective strategies,” says the report.

The report also finds marketers are expected to turn online to supplement offline campaigns more often, and will use search engine marketing around an offline campaign to drive consumers to their Web site for more information. In order to better serve these traditionally offline advertisers, agencies must devise strategies to better integrate online and offline campaigns, Wigder advises.

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