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Ad Spending Survey Shows Online Ad Penetration Higher than Previously Reported
February 13, 2006
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Burlingame, Calif., -- The results of a national advertising spending survey, fielded to 1,200 advertisers in November 2005 who control an estimated $2.4 billion in advertising, are summarized in “The Annual Ad Spending Study: Where and Why Advertisers are Moving Online.”  

The study conducted by Outsell Inc. is the first to analyze differences across advertisers and cover all of the markets they target -- B2B, B2C, and healthcare. The survey tackles subjects such as:

  • Budget allocation, growth rates, and trade-offs across all types of advertising, including print, TV/radio, online, and events.
  • Advertisers' views about the effectiveness of Google versus Yahoo! and Microsoft.
  • Performance of keyword ads versus contextual and behavioral ads.
  • Why advertisers choose one channel over another.

One major finding of the study is that the online channel is now used by 80 percent of advertisers, higher than previously reported. Researchers project more than 90 percent adoption by 2008.

Another major finding is the shift away from traditional media due to the unprecedented power that online advertising has provided to smaller businesses.

"Companies with ad budgets of less than $1 million are shifting more of these budgets to high ROI online ad options. En masse, these smaller companies are denting the bottom lines of television and radio stations, as well as print media," said Chuck Richard, Vice President and Lead Analyst, Outsell, who led the research effort.

For certain applications, however, "old media" are far from dead. For instance, trade magazines, events, and direct mail marketing are rated the top three most effective tactics for both branding and lead generation.

The study also compares spending on search engines, company Websites, email marketing, Webinars, blogs, online directories, wireless media, and more.

Among other Outsell findings:

  • Total online marketing spending will grow 19 percent in 2006, eight times the rate of TV ads and six times the rate for print ads.
  • Spending on search engine advertising will grow 26 percent in 2006.
  • Advertisers consider Google more effective than Yahoo! and MSN for keyword ads, and more effective than Yahoo! for contextual ads. In addition, those rating Google "extremely effective" have smaller ad budgets than those giving Yahoo! or MSN the same ranking.

To download the report, go to www.outsellinc.com/adstudy

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