Study: Online Ads Capturing Greater Share of Overall Budgets

Online advertising is increasingly being viewed as a cost-effective alternative to traditional media, according to a new study from CyberAtlas Research, a unit of INT Media Group’s internet.com Network. internet.com also is the publisher of internetnews.com.

According to the study, entitled “Internet Advertising: Where Are We Now?”, Internet advertising is in the midst of a formative period, but still valued as reasonably effective. For instance, although advertisers have struggled to measure the effectiveness of online ad campaigns, 60 percent of the study’s 235 respondents still felt most forms of Internet advertising were effective — more so than broadcast (54 percent), print (43 percent) and direct mail (22 percent).

As a result, even though much has been written about the decline in across-the-board advertising spending, CyberAtlas said 38 percent of the respondents reported increases in their Web ad budgets from last year, while 31 percent saw their ad budgets decrease.

That increase in online ad budgets would seem to suggest that as overall budgets contract, dollars typically spent on traditional advertising are instead being used on the Internet.

“Internet advertising has been hampered by a soft overall advertising market and high expectations,” said CyberAtlas Research senior analyst Michael Pastore. “Advertisers are searching for cost-effective methods of delivering messages to consumers online. Our study found that advertising professionals believe in the effectiveness of Internet advertising and will keep working it into their media plans.”

Among the various types of Web advertising, forty-seven percent of the study’s respondents said they viewed site sponsorships as the most effective format, followed by streamed ads that appear while a page loads (29 percent) and skyscraper ads (28 percent.)

Additionally, respondents said they viewed email as the most cost-effective means to deliver direct-response messages. More than 35 percent of the advertising professionals surveyed said email is an “extremely” cost-effective direct-response medium, versus 6 percent who favored direct mail.

Although the study returned reassuring findings, it’s important to look closely at the methodology. Research for the study was conducted via third-party research firm Insight Express on internetnews.com‘s Internet Advertising Report and on ClickZ — both sites published by internet.com, which makes most of its money through the sale of Internet advertising.

Additionally, because these two sites are about the online advertising industry, their traffic is likely comprised in large part by workers in the industry — who are thus more optimistic about its prospects than, say, strictly offline marketers.

But Pastore said the study takes that largely into account.

“We didn’t really ask respondents to look far into the future and predict where online advertising would be, but rather, we tried to get a feeling on what they’re doing now and how it’s working,” he said. “In some cases we saw Internet methods trailing traditional methods. For example, 21 percent said email wasn’t very cost-effective for branding.”

“While it’s true these respondents have more experience with interactive methods of advertising, it doesn’t always mean they think they’ll all work,” Pastore added.