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Small brands big on Internet advertising

By Carlos Grandein in London
October 05, 2006 05:20 IST
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Increased spending by smaller brands will propel the internet to a greater share of advertising spend this year than the worldwide posters and outdoor sector, according to forecasts by ZenithOptimedia, the international media buyer.

Zenith predicts that global Internet advertising spend will increase 30 per cent to $24.1 billion this year and by 84 per cent to 2008. Smaller advertisers are driving growth, with companies in the 10 biggest categories spending a lower share of their budgets online than the industry average between 2001 and 2005.

Marketing on web search engines such as Google and Yahoo is popular with small traders who lack funds to buy exposure in the mass television or press and often want to target niche audiences.

As search advertisers typically pay when customers click on ads, the practice is praised as being more efficient at reaching buyers than traditional marketing, though critics say search is still vulnerable to fraud and inaccuracy.

But in the UK, where the internet's share of national advertising is highest at a forecast 12.9 per cent this year, search marketing is believed to account for more than half of all internet advertising spend.

Jonathan Barnard, head of publications at Zenith, said search and other web formats were bringing "new money" into marketing rather than merely encouraging advertisers to move budgets from traditional to new media.

The issue of how much new money the Internet generates is a strategic one for established media owners, faced with the challenge of building new media businesses without cannibalising existing units.

Barnard said, "Internet advertisers are often people who wouldn't have been able to spend on television or press anyway, so we think the Internet is creating some new demand."

However, he said there was evidence that the rise of the web as a low-cost alternative was also encouraging large brands to drive better bargains when buying television or press advertising, holding down growth rates in non-web media.

Zenith predicts global ad spend will slow from 6 per cent this year to 5.4 per cent in 2007 before a modest pick-up to 5.9 per cent in 2008 -- all measured at average 2005 currency rates.

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Carlos Grandein in London
Source: source