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Online to take 20% of advertising budget in US in 2007

Outsell, Inc. has just released its second annual report on ad spending, forecasting U.S. advertising to grow 5.8 percent in 2007.
The comprehensive national study of advertisers, who control about $6.5 billion of spending, shows that companies plan to increase their online spending by 18 percent this year, faster than for any other major media type.
Advertisers also plan to raise their spending for advertising on search engines by 39 percent, the fastest of any online media method.

Outsell fielded a Web-based survey of 1,010 advertisers and looked at five media types—online, print, events, TV/radio/movies, and other. Among this year’s findings:

Print, while still the largest recipient of ad dollars (40 percent), will continue to lose share as online’s share grows to 20 percent. This is a major milestone for online advertising.
• Advertisers’ share of online spending for pay-per-click (PPC) ads will fall one percent in 2007, while cost-per-action ads’ share will grow eight percent and online sponsorships’ share will rise 12 percent.
• Click fraud concerns are a driver in PPC’s drop in share. Forty-nine percent of advertisers have reduced or plan to reduce their PPC spending because of click fraud, up from 37 percent when Outsell first surveyed advertisers on this issue in the Spring of 2006.

Advertisers also rate their own Web sites and e-mail marketing more effective than search engine ads, additional drivers in PPC’s slowdown.

• Advertisers rate online advertising very effective for branding, contrary to common wisdom that online shines at leads but is weak for branding.
• The share of TV/radio/movie ad spending will decline about 3.5 percent this year.
• This is the first study to reveal that advertisers are redirecting more trade magazine ad dollars to events than they are moving to paid search.

Source: Outsell PR

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