Internet Ad Spending Continues to Thrive

What is sure to be another outstanding year for interactive media sales is confirmed by the latest data released by TNS Media Intelligence who are reporting that spending on Internet display ads grew by 13% to $8.3 billion in 2005. Spending on traditional media, including local newspapers, network TV and consumer magazines, continues to lead, but online advertising spending far outweighs spending on national newspapers, outdoor ads and network radio. See chart below from eMarketer.com.

US Advertising Spending Comparing 2004 to 2005

Clearly this trend to spending more money advertising online is a direct result of the declines in traditional media usage. What is important for Calgary based businesses is not to rely completely on search engine marketing as the sole source of Internet advertising spend.

By this I mean, one of the biggest advantages to the Internet is branding or impression based advertising. Usually when I speak to a local business owner about online advertising they first thing they talk about is search engines. Search engines are powerful, they are similar to printed Yellow Pages and are an important part of the media mix. However, many of these same businesses advertising in the newspaper, TV, or radio as well as the Yellow Pages.

When I ask them why, they usually repsond with, the Yellow Pages captures people who know what I am looking for, the rest of the media raise awareness and help me through promotions and specials. This is same for the Internet. Search Engine placement is great for people who know what they are looking for. However, banners and impression based advertising are the tools that can really drive sales. Similar to the reasons why you would run a special in the newspapers for a weekend sale, local businesses should be advertising the sale for 3-days prior on top Calgary portals.

Trust me, the cost of impression based advertising today is so inexpensive compared to where the prices will be in 2-years from now. Here are some more highlights from eMarketer.

At the same time, Nielsen//NetRatings’ AdRelevance recently examined the growth in display ad impressions, and their findings demonstrate a clear growth trend from March 2005 through January 2006:

Online Display Ad Impressions

Finally, OnlineMedia Daily, reported in late February that Merrill Lynch remains bullish because, according to the firm, Internet advertising is the only medium showing any real growth. Merrill Lynch also reports that online advertising revenues are expected to show an increase of 27.4% in 2006. Meanwhile, eMarketer contends, in a more detailed breakdown, that growth in all areas of online ad spending points to a robust future for the next few years.

US Online Ad Spending

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