Report: Online Ad Spending to Hit $32 Billion in 2005

A new industry study predicts that online ad spending will reach $32 billion in 2005, surpassing even many of the most bullish forecasts made to date.

The first online advertising study from The Myers Group predicts that spending for 1999 will approach $2 billion. The report anticipates a continued rapid escalation in online ad spending during 2000, a slight slowdown in growth as consolidation hits the industry in 2001, but “extraordinary growth in 2002 and beyond.”

The report says that ad spending across all media will total an estimated $400 billion in 2005, making online’s share eight percent.

“Our extremely bullish forecast is based on results of our field research, which point to online’s underlying strength as the most highly targeted, most directly measurable and most interactive medium ever,” said Jack Myers, chairman and chief executive officer of The Myers Group.

“Our research shows that online will undergo some growing pains, most notably caused by forces that would commoditize the business and put it in competition with other media, especially network television. But we believe strongly that marketers and their online agencies will be supportive of efforts and initiatives that focus on sponsorships, marketing partnerships and integrated marketing programs.”

The survey also found that targeting led the list of factors considered in deciding whether to use online advertising. Top five among 20 listed factors:

1. Targeting, 81%
2. Brand building, 77%
3. E-commerce, 60%
4. Audience reach, 56%
5. Click rates to corporate sites, 47%

The Survey of Advertising Executives on Online Advertising was underwritten by the online industry and sanctioned by the Internet Advertising Bureau (IAB), Myers said.

Results are based on a self-administered questionnaire completed in March and April 1999 by 108 respondents. Sixty-two percent of respondents were marketer executives, 38 percent were agency executives.

The Myers Group is a specialist in competitive market positioning and revenue development capabilities for the media industry. It publishes The Myers Report, a daily fax newsletter on media and advertising issues, as well as reports on a wide variety of management topics.