Monday, November 12, 2007

IBM Predicts Shift to Interactive Advertising

IBM Predicts Shift to Interactive Advertising

A major shift away from traditional advertising to interactive ad formats will occur in the next five years, according a report released by IBM Global Business Services. It's title is "The End of Advertising as We Know it."

The main future growth areas will involve advertising distributed through mobile communications devices and the Internet, followed by ads embedded in video games. Growth in these areas is anticipated to be up to four times faster than that of traditional media used for direct marketing.

Two-thirds of the executives polled expect 20% of ad expenditures in the next three years will shift way from impression-based pricing formats where the actual impact of ads can be tracked -- and priced accordingly.

Internet advertising will increasingly be distributed through online advertising networks and social networking Web sites.

Greater data tracking capabilities will improve the ability to target individual consumers with personalized advertising based more on lifestyle data, than contemporary methods for targeting by Zip codes and at the household level.

IBM's findings are based on surveys of more than 80 advertising executives and analysis of recent trends concerning how consumers have gained more control over how they view, interact with and filter out electronic forms of advertising.

U.S. Online Ad Budgets Up 28% This Year: EMarketer
By Brian Quinton

(Promo XTRA) Spending for online advertising in the United States will wind up being almost 27% higher in 2007 than it was last year, according to new findings from marketing research firm eMarketer.

That compares to a total increase in media ad spending of only 2.1%. And next year's online figure should grow even more.

The forecasts are part of a new study, "U.S. Advertising Spending", which tracks the course of Internet advertising in this country and relates it to total ad spending. The report predicts that marketers will spend $21.4 billion on Internet advertising in 2007 and may spend $27.5 billion on the Web in 2008. By 2011, eMarketer expects U.S. online ad spending to hit $42 billion.
Those dollar figures will still represent a small proportion of total ad spend, however. Marketers will only direct 7.4% of their budgets to the online sphere in 2007, and next year's $27.5 billion prediction will still represent only 10% of total U.S. ad spending. EMarketer foresees online advertising reaching 13% of total ad spend by 2011.

The report also finds that growing numbers of marketers are funding those Internet ad budgets with cash shifted from traditional media spends in TV, radio, newspapers and magazines. The top 100 national advertisers (as listed by Advertising Age) spent a total of $230 million less on those old-school media in 2006 than they had in 2005 and increased their Internet ad spending by an aggregate $558 million in the same period, eMarketer found.

According to eMarketer, paid search marketing will make up the bulk of that online ad spending (about 40%) through 2011. Display ads such as static banners will account for almost 22% of spending this year but drop a bit to 19.5% by 2011. But spending on rich media ads or online ads incorporating video will grow from 8.2% of U.S. online spending this year to more than 13% in 2011, the report said.

Spending on other forms of online advertising (classifieds, lead generation, e-mail marketing and sponsorships) will either hold steady or decline slightly over the next four years, according to eMarketer.

The firm is still crunching the numbers on social network advertising, but predicted that U.S. marketers will spend $900 million to advertise on those networks in 2007 and $2.5 billion to do so in 2011.

Downturns in the financial sector will dampen online ad growth in 2007 and 2008, eMarketer predicted. But reduced Internet spending by mortgage companies will be offset by other advertisers' interest in buying up the low-cost display inventory they've traditionally favored.

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