Online Adopted by 80 Percent of Advertisers

According to the recent Outsell annual Ad Spending Study to analyze differences across advertisers and the markets they target: B2B, B2C, and Healthcare, Yahoo! and MSN face extended minority status in the ratings of advertisers if they don't change the perception that ads on Google are more effective.

Shared on a complimentary basis, the study is based on advertisers controlling an estimated $2.4 billion in advertising with a confidence level of 95±3%, concludes that leading B2B trade information providers will generate 35% to 50% of their revenue online within two to three years. Advertisers are hooked on the results they're getting from targeted and measurable online marketing methods.

Chuck Richard, Vice President & Lead Analyst Outsell, Inc., suggests that print, TV/Radio, and events will lose share in the marketing mix, but they don't come close to being blown away. Marketers will continue to find strong value in the power of a mix of methods for reaching and influencing their prospects. He further opines that the 80% penetration of online marketing methods, already higher than widely reported, will quickly approach 100%.

Key findings include:

  • Winner: Search engine ad spending grows 26% in 2006.
  • Losers: Print spending grows 3.3%, TV/Radio 2.4%, both losing share.
  • Online is now used by 80% of advertisers, a massive adoption rate not broadly acknowledged. We expect more than 90% adoption by 2008.
  • Google is rated more effective than Yahoo! & MSN in keyword ads; and than Yahoo! in contextual ads.
  • Total online marketing spending will grow 19% in 2006, 8 times TV/Radio and 6 times print. We estimate online growth at 20% CAGR extending into 2008.
  • Even more dramatic, the median online percent of ad mix will grow 50%.
  • Lead-generation using free content such as white papers will grow 19%, driven by high conversion and users opting in.
  • Keyword ads are rated much more effective than contextual placement; we expect contextual / behavioral / search combo to rise.
  • Companies' own sites get 33% of their online budget, double that spent on search engines. Better natural search results from site optimization is driving this and will fuel growth in Web marketing services.
  • Blog and wireless marketing spending are still slivers at less than 2% of online budget and are poised to grow 43% and 19%, respectively.
  • Old media's far from dead: trade magazines, events, and direct mail marketing are rated the top 3 most effective tactics for both branding and lead generation.
  • Avid Google Advertisers Have Smallest Budgets; Use Most Online, Least Print

Percentage Allocation of Marketing Budget
  Google Yahoo! Microsoft
Total Marketing Budget (Million $) $3.7 $4.6 $4.6
Print 27.1 29.1 29.9
Online 29.6 27.9 25.5
Events 24.3 21.1 24.7
TV/Radio 19.1 21.9 19.9
Source: Outsell's Advertising Tracking Database

  • Those rating Google extremely effective have 20% smaller total advertising budgets than those rating Yahoo! And MSN extremely effective.
  • Those rating Google extremely effective allocate more of their advertising spending online, less to print and TV/Radio. MSN users allocate the most to print, the least to online.
Percent Spending Allocation of Total Marketing Budget
  2005 2006
Print Media 29.2% 28.5%
Events 22.7% 22.8%
Online Media 16.2% 18.2%
TV, Radio & Other Media 31.9% 30.6%
Source: Outsell's Advertising Tracking Database
 
  • Online Spending Will Grow 19%, Take More Share from Print, TV & Radio

Spending Percent by Type & Growth Rate
  Percent 2006 Spending Growth Rate
Online Growth - 19.0%
TV and Radio 49.8% 2.4%
Public Relations 25.7% 1.4%
Other 24.5% 1.0%
Source: Outsell's Advertising Tracking Database
 
For more information about the study, please visit here.

Article by Jack Loechner, 8 March 2006.

The original article can be found on MediaPost.