Net Ad Spending to Surpass Network TV

Spending on Internet advertising is expected to surpass the megabucks spent on network television advertising in the United States by 2005, according to a survey by the Myers Group, New York, released this week.

Although online advertising revenue is currently only $4.3 billion, the report says it is expected to soar to $32.5 billion by 2005.

"Marketers will change their communications plans, putting the Internet first in their priorities and then driving everything else behind it in a convoy approach," said Jack Myers, chief economist at the Myers Group, an economic research firm. "The Internet will be the lead truck, and they'll use all other media to support what they're doing on the Internet."

Network broadcast advertising has been healthy, as it is expected to pull in $16.8 billion in revenue this year. That number is expected to grow, but not as dynamically, to $19.2 billion by 2005. Cable television advertising is expected to explode, however, from $10.1 billion to $23.8 billion in 2005.

The bulk of online ad spending is expected to come from major industries such as automotive, entertainment, financial services, telecommunications, tourism and travel. Retailing, real estate and classified advertising are expected to contribute as well.

Myers anticipates offline direct marketing will wane during the next five years. "What's happening is online advertising is becoming a driving engine that's [taking dollars away] from direct mail, consumer sales promotions and trade promotions," said Myers.

A decline could be in store for time-tested tools such as offline coupons, free-standing inserts and other newspaper-based marketing. "A huge amount of money goes into those media. We will see a lot of those dollars shifting over to advertising on the Internet," he said.

The superior interactive nature of the Net will drive marketers to electronic advertising, said Myers. "We're seeing one-to-one marketing we haven't seen [since the turn of the century], where the seller has the ability to communicate directly with the buyer. They can put the proposition in front of them to find out what motivates them and deliver that."

The study also predicts that online ad spending will grow globally from $5.25 billion to $45.5 billion by 2005.

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