Nearly half of U.S. marketers plan to spend less this year on newspapers, magazines, direct mail and other traditional advertising channels, so they can spend more online, a study released Tuesday showed.
The cause for the shift is the change in consumer behavior, according to Forrester Research Inc., which published the study, "U.S. Online Marketing Forecast: 2005 to 2010." An increasing number of consumers are using the Web to get news, sports and entertainment reports and to buy products and services.
Online consumers today spend about a third of their time online, either at home or at work, which is roughly about the same amount of time they spend watching television, Forrester said.
"In trying to reach consumers through the medium that they use, marketers are focusing a lot more on the online channel," Forrester analyst Shar VanBoskirk said.
In addition, marketers can measure the effectiveness of e-mail campaigns, banner ads and search marketing better than ads on traditional channels. Online ads can also be interactive, which can increase their return by requiring a consumer to get actively involved in a promotion.
The study, based on an online survey of 99 of the nation's largest marketers, found that 47 percent would send more online at the expense of traditional channels. Eighty-four percent of the respondents planned to increase their online budgets this year by an average of 25 percent over 2004.
Total online advertising and marketing spending is expected to reach $14.7 billion this year in the United States, a 23 percent increase over 2004, according to Forrester. By 2010, online ad spending is expected to reach $26 billion, or 8 percent of all advertising dollars spent.
Search-engine marketing is expected to lead the charge, with spending projected to increase by 33 percent this year to $5.7 billion. By 2010, search-related marketing is expected to reach $11.6 billion, or 44 percent of all online spending.
New online advertising channels are also drawing interest among marketers. Sixty-four percent of the respondents said they were interested in advertising on blogs, 57 percent through RSS, a technology used to distribute and update web content on pages; and 52 percent on mobile devices, including phones and handheld computers, Forrester said.
As marketers learn to use online advertising more effectively, they're quickly losing confidence in return on investment in traditional channels. For example, 78 percent of the respondents told Forrester they expected search-engine marketing to become more effective over the next three years, compared with 53 percent who felt TV advertising would become less effective.
The only non-digital advertising channel that garnered the same level of confidence among marketers as online was product placement, which is paying to get products shown in movies or on TV programs. Only 8 percent of survey respondents believed product placement would become less effective over the next three years.
The survey doesn't sound the death knell for newspapers and magazines, but certainly shows them losing money to online ad publishers, VanBoskirk said.
"The smart media companies are the ones that accommodate whatever channel the consumer wants to use," the analyst said.
For example, The New York Times Co., publisher of The New York Times, The Boston Globe and other newspapers, announced in February that it planned to buy About.com from Primedia Inc. for $410 million in cash.
About.com, which offers expert advice on topics ranging from personal finance and home repair to consumer electronics and geography, reaches an audience of 22 million unique visitors each month. The Times Co.'s websites reach about 13 million users a month.
As the demand for advertising on the web increases, so will prices, particularly on the large web portals like Yahoo Inc., Microsoft's MSN and Google Inc., VanBoskirk said. This should make less expensive print advertising more attractive, particularly for local advertisers.
Nevertheless, with more people turning to the Internet for general news, sports and other information, newspapers and other print media will need to provide content consumers can't easily get online, such as local news and information on community events and activities.
"I believe we'll see an evolution in newspapers that is less news heavy and more feature focused and tailored to local communities," VanBoskirk said. "The media people that will suffer are those who ignore the shift and don't change their print medium into something that's more appropriate for the consumer of today."
