Report: Net Ads Set for Boom

New research released Wednesday by Jupiter Communications predicts that in five years, every Internet user will be exposed to more than 950 marketing messages every day. The report also predicts that $16.5 billion (US$) will be spent on online marketing by 2005.

The advertising sprawl means that marketers will have to diversify their use of online tactics and advertising models to make their ads stand out, according to the New York-based research firm.

Coming Soon

Jupiter analysts said online ad revenues will grow at a compound annual rate of 30 percent through 2005, noting that approximately 73 percent of advertisers plan to increase their online spending in the next 12 months.

By comparison, 43 percent of advertisers said they will increase their magazine spending, and 37 percent plan to increase their cable television budget.

The expected boom in online advertising — driven by increasing online population, a rise in time spent online and increasing e-commerce revenue — is expected to boost the Internet to almost eight percent of the total U.S. advertising market.

An Efficient and Accountable Approach

In order to take advantage of the online ad explosion, Jupiter said that online advertisers must supplement their banner advertising with e-mail marketing, viral campaigns, affiliate networks and sponsorship.

The various efforts to find more efficient and accountable approaches will help propel online ad spending at a rapid rate, Jupiter said.

“Over the past two years, we have seen overheated offline advertising spending by access, commerce and content companies that were willing — even eager — to pay hundreds of dollars to acquire new customers, seemingly without regard for the lifetime value of the customers,” said Patrick Keane, director and senior analyst with Jupiter.

Financial Services Out in Front

In its report, Jupiter also pointed out that many of the largest spenders offline will also provide the bulk of the expected $16.5 billion spending online.

Leading the pack of online ad spenders will be financial services, which will increase spending from $700 million in 1999 to $2.4 billion by 2005, Jupiter said.

Other big spenders will be media companies, computer hardware and software products, telecommunications companies, travel, automotive, health and consumer packaged goods and services.