February 17, 2006

A recently published report by Outsell Inc. shows that a growing number of advertisers dedicate a certain percentage of their budgets to the Internet.

Outsell's "Annual Ad Spending Study: Where and Why Advertisers are Moving Online" reveals that about 80 percent of advertisers and marketers include the Internet in their overall marketing mix.

What's more, this 80 percent number is expected to grow to 90 percent of all advertisers in two years from now.

For 2006, Internet marketing spending is expected to go up 19 percent. This is 8 times television and radio's expected 2.4 percent rise and 6 times print's 3.3 percent.

Outsell's report says "The median online percent of ad mix will increase 50 percent."

Within online's increase, search engine ad spending is set to grow 26 percent this year. Budget allocation for Google amounts to $3.7 million; $4.6 million for Yahoo!; and $4.6 million for MSN.

Google is viewed as more effective by respondents with budgets that run 20 percent smaller than those who prefer Yahoo and MSN.

The Google camp also commits a larger percentage of its budget to online versus other channels.

This group averages 29.6 percent of its budget for the Web. The group that finds Yahoo! to be the most effective commits an average 27.9 percent, and marketers who prefer MSN allocate 25.5 percent of their marketing mix to the Internet.

"I think smaller firms have less bandwidth to try out multiple search engines," Outsell VP and Lead Analyst Chuck Richard told ClickZ Stats. "Google has a lower minimum bid price for keywords than Yahoo and MSN."

Currently, keyword ads are rated as more effective than contextual and behavioral placements. Both contextual and behavioral are expected to increase over time.

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"You'll see a combination of contextual and behavioral," said Richard.

Spending on blog and wireless marketing sits at two percent of the online budget. Blog advertising should grow 43 percent; and wireless is expected to increase 19 percent.

"Advertisers indicate they will increase their spending," said Richard. "They're not taking a wait-and-see approach."

The findings are derived from a survey of 1,200 advertisers conducted in November, 2005. Respondents control an estimated $2.4 billion in advertising.

Source: Click Z

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