eMarketer's Hallerman Says Companies Putting More Money Into Online Advertising
David Hallerman, a senior analyst at market research firm eMarketer, recently released a report titled "US Advertising Spending" that found that U.S. Internet ad spending surpassed $5 billion in the second quarter of 2007 - the largest sum recorded in any quarter, according to research from the Interactive Advertising Bureau and PricewaterhouseCoopers.
The report also projected that spending will leap past the $6 billion mark in the fourth quarter of 2007.
eM+C Weekly asked Hallerman to expand on his report. Here's what he had to say.
eM+C: According to your report, how are budgets changing overall?
David Hallerman: While marketers are putting more money into online advertising, they are also putting more and more money into company and brand Web sites. As the central meeting grounds for companies and consumers, all the measured billions spent on online advertising such as paid search -- which looks to drive traffic to company sites -- would be for naught.
In the more experimental realm, companies are looking increasingly to non-advertising types of marketing, such as word-of-mouth and product placement. However, the still-experimental nature of such marketing makes the dollars relatively small. For these areas, as with consumer-generated sites such as social networking, brand-sensitive marketers are still just dipping their toes into exploring these non-traditional marketing formats.
eM+C: According to the report, paid search will continue to draw in the most advertising dollars. Search, expected to account for 40.3 percent of online budgets in 2007, likely will account for 39.5 percent of budgets in 2011. Display ads will be the next highest spending bracket with analysts expecting about 20 percent of online budgets to be spent. Why do you believe these two areas are most popular?
DH: Like classic postal direct mail, search is provable. Advertisers can track who clicks on their ads and what they do after the click. Furthermore, since search results come up in response to an individual's query, and since that query indicates the individual's interest or intent, search ads are highly targeted. And that targeting is not just by interest, but by currency -- that individual is interested in that topic at that very moment.
Just as paid search is the prime method for direct response marketing online, display ads are the most popular method for brand advertisers. The concept of display ads includes not just static banner ads but video ads and other rich media. With the broader definition of display including those other branding ads, that means display will account for over 32 percent of total U.S. spending by 2011. As the largest advertisers in the U.S. -- mainly brand advertisers -- put more of their ad dollars online, they will need these formats to woo people's hearts and minds.
eM+C: Given the current stats in your recent report, do you have any tips or best practices for e-marketers?
DH: Marketers are increasingly using search not just for direct response objectives, but to support branding campaigns. For example, when a company introduces a new brand, product or service, it should consider bidding on keywords relevant to that new offering. Then it can use search results to help track the effectiveness of its new campaign and modify it as needed since search gives rapid results.