Posted on 07/19/2006 7:12:36 AM PDT by abb
Dramatic increase in ad spending for first quarter
By Samantha Melamed Jul 18, 2006
Online advertising typically leads all other media in growth whenever a new spending report comes out, so it's no surprise that it's tops in the latest figures from Nielsen Monitor-Plus for the first quarter of 2006.
What is surprising is the astounding growth the ad-tracking service reports: 46.4 percent for the first three months over the year-earlier period.
That's well beyond even the rosiest forecasts, which have tended to range between 10 percent and 20 percent in the years since the internet began crawling out of the ad recession that began in late 2000.
That 46.4 percent figure is also well above that reported by other ad-tracking services. TNS Media Intelligence in May reported a 19.4 percent rise in first-quarter internet ad spending over the year-earlier period. But then TNS tracks only display advertising, not paid search, which is where the huge growth has been online.
Also in May, the Interactive Advertising Bureau reported a first-quarter growth of 38 percent over first-quarter 2005, based on a study by the New Media Group of PricewaterhouseCoopers. According to the IAB, spending equaled $3.864 billion.
What's more, Nielsen Monitor-Plus reports that the internet's share of ad dollars is growing no less dramatically, though from a small base. The web in April accounted for 5.25 percent market share of U.S. ad spending, according to Nielsen//NetRatings AdRelevance. That's up from 3.51 percent in April 2005. Meanwhile, local newspaper spending fell from 6.48 percent to a 5.61 percent share, according Nielsen Monitor-Plus.
Nielsen Monitor-Plus and NetRatings analysts were unavailable yesterday to explain the huge first quarter growth in web ad spending, but recently Universal McCann's Robert Coen, in his semiannual forecast, predicted that dot.com spending would rise by as much as 25 percent this year.
Coen says much of the growth in online spending is coming from the industries building up the internet side of their businesses, led by insurance and real estate, financial, amusements, telecom and retail.
Coen's also predicts 25 percent growth in online spending for the year, but even at that pace, the internet is easily outpacing the next-fastest growing medium, Spanish-language television.
That medium saw first-quarter growth of 14.3 percent over the year-earlier period. Strong growth in outdoor, network TV and national magazines also helped bring total growth in first quarter ad revenues to 5.6 percent.
That's right on track for the 5.6 percent annual growth Coen predicted for the year. Coen had trimmed his forecast earlier this month from 5.8 percent. It's slightly ahead of the 5.4 percent annual gains TNS forecast in January. TNS revised the forecast to 4.9 percent last month.
Coen modified his forecast in part because of the Winter Olympics' failure to provide an expected boost. But according to Nielsen, the Olympics did help produce the 11.1 percent first quarter gains in network TV advertising, bringing in $1.1 billion.
But local advertising appears sluggish, according to Nielsen Monitor-Plus. It reports that local newspaper spending was down 5.1 percent and spot radio and spot TV were nearly flat.
With the bulk of political spending still to come, though, some forecasters are expecting the strongest growth to be in the second half of the year.
For the first quarter, the 10 largest advertising categories grew a healthy 6.1 percent over the year-earlier period, to $10.5 billion.
While the top category, auto factory and dealer associations, upped spending 4.1 percent to $3.3 billion, car dealerships cut advertising 7.4 percent. Among the top 10 companies, which together accounted for $4.6 billion in spending, 11.4 percent year to year growth was powered by major boosts in advertising from AT&T, Inc. (up 76.5 percent), General Electric (up 54.4 percent) and Verizon Comm. (up 46.1 percent).
Ping
Can we say "the handwriting is on the wall"?
or perhaps on the messageboard/blog is now more appropriate.
MSM revenues plunge, new media skyrockets.
The question in my mind..... does web advertising sell any thing?
I tune them out and if I want something go look for it.
What is happening is that online advertising is easier to target than tv or newspapers. When someone clicks on an online ad, the advertisers KNOWS he's getting to his customer. With televsion and newspapers, there's no way to tell if an advertiser's customer actually SEES his ad, let alone acts on it.
Plus, online is much more specific than "broadcast" advertising...
yes but does it sell anything?
One would have to surmise it does. Just as much as an ad in a newspaper or on tv would...
If the "wantmakers" (Madison Avenue ad designers) are doing their jobs, they do. But the first job of an ad exec. is to make sure the pitch gets put in front of the correct customer. Then the ads themselves take over with their vast powers of persuasion.
Nevertheless, spending thousands to "narrowcast" your ad is much more economical than spending millions to "broadcast" your ad to folks who aren't interested...
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