CPG Online Ad Spending Will Spike, But Not Catch Leaders

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Consumer packaged goods spending online will continue to rise through 2009 but won't reach the levels of other industries like financial services, automotive, travel and media and entertainment, according to a new report from JupiterResearch.


These industries will be the main drivers of online spending, the New York market researcher said. They have established themselves as anchors of online advertising, since their spending shows no sign of abating over time.


Financial services is expected to contribute 14 percent of the overall online ad spend by 2009. In raw numbers, 2009 spending will be $1.69 billion, up from an estimated $1.1 billion.


The increased spending in financial services is driven by a couple factors. First, a number of banks are looking to attract new customers. Second, these institutions also are driving current customers to the Web channel.


"This second goal will be driven by the continued need, among banks and other financial institutions, to find ways to better service customers while simultaneously cutting costs," JupiterResearch said in the report written by lead analyst Gary Stein, contributing analyst Niki Scevak and research director Zia Daniell Wigder.


Media and entertainment, as a category, will contribute even more to the online ad pie: $2.04 billion by 2009, up from nearly $1.3 billion in 2004. Music, video and movie tickets will be not just researched online, but also bought. The growth of legal song downloads will be a catalyst in this upward trend.


Automotive spending online again simply is following the consumer. The Internet is increasingly one of the means for consumers to decide which car to buy. One in five car purchase leads now is influenced by online research, JupiterResearch said. The report states that automotive spending online will reach $1.42 billion by 2009, up from a quarter-billion dollars in 2004.


Travel is another major Internet advertiser. Spending in that category, at $935 million, will account for 8 percent of dollars spent online in 2009. This is more than double of what was spent last year. JupiterResearch said travel is consistently a top e-commerce performer, so its ad spending will continue commensurate with the tendency to research and book online.


These four industries cited by JupiterResearch most likely will be the largest adopters of advertising optimization and targeting technologies.


"This is [because of] the direct marketing nature of these companies, leading them to spend on measurement technologies and to be interested in pay-for-performance ad models," the report said. "Companies in these industries are consistently in need of data in order to optimize placement for their ads. These companies also require reliable information on how much a click costs and how well it converts."


These industries also will invest heavily in search engine marketing in the years ahead to connect with qualified customers.


That said, spending on consumer packaged goods and healthcare advertising also will spurt in the next four years. Though they will not account for as many ad dollars, they will lead in advertising innovation.


Both categories currently are big investors in brand advertising as well as loyalty building programs online.


And, as JupiterResearch notes, the Internet remains a new venue for generating awareness and intent for general agencies that have served CPG and healthcare clients.


However, the growth of broadband connections at home will let rich and streaming media expand, giving general-agency creative directors another medium to apply their skills. New Web sites to encourage longer and repeat visits are expected, too.


JupiterResearch suggests that agencies and publishers make strategic decisions in the coming years to target industries that will grow quickly and result in sizable billings. Six industries were singled out: computer hardware and software, telecommunications, financial services, automotive, travel and media and entertainment.


"These industries not only currently spend significantly, but also demonstrate room for growth," the report said. "Agencies should pitch these clients for retained relationships, as their spending will not abate and they will most likely seek stable, contracted partners who learn the business. Publishers should keep these industries in mind when creating new content offerings intended for sponsorship."


Mickey Alam Khan covers Internet marketing campaigns and e-commerce, agency news as well as circulation for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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