The report attributes the increase to a jump in the number of Americans with high-speed Internet access, now estimated at 120 million, or roughly 42 percent of the population. There are an additional 54 million dialup users.
“More and more marketers have embraced interactive as an essential medium to reach and engage their customers in more immersive brand experiences,” IAB President and CEO Greg Stuart said. “Interactive advertising continues to prove itself as the most cost-effective medium in driving sales and changing customer attitudes.”
The IAB and PricewaterhouseCoopers last week released a joint study showing Internet advertising revenues for the third quarter of 2005 totaled $3.1 billion and continue to rise. Revenue from TV advertising, meanwhile, has dropped sharply.
Proctor & Gamble, for example, spent 20 percent less on TV advertising during the past six months of 2005 compared to the same period in 2004. Meanwhile, the company has increased its online advertising by 55 percent. Similarly, Google collected $1.56 billion in ad revenue for the three-month period ending Sept. 30, putting it nearly neck and neck with Viacom’s 25 basic cable stations, which collectively pulled in $1.65 billion.
One analyst cited in the report predicted that 30-second TV commercials will lose their place as the primary branding vehicle during the next few years and be replaced by 10-second Internet spots.
“Advertising money is going to go to the medium that best delivers a relevant message and, in turn, can demonstrate that it’s the engine behind increased revenues,” Matt Freeman, CEO of Tribal DDB Worldwide, said.
But the report also indicates that most mainstream marketers still don’t understand SEO. Many of the ad agencies that reported large spending increases for online advertising said they do not have any SEO strategies in place nor do they employ SEO specialists.