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BizReport : Advertising archives : October 09, 2006

Online Ad Budgets Dropping

A new report from Blackfriars Communications indicates that only 16% of marketing budgets will go to online advertising this year. This includes email advertising campaigns, display ads and Internet media spending.

by Kristina Knight

BlackFriars Communications is a consulting firm that conducts quarterly surveys of marketing professionals about their budgets. The company surveyed about 300 marketers for the quarterly review. At the beginning of the year, professionals estimated that companies would spend upwards of 23% online, so this number, while good for online campaigns, is a significant drop. In total, the online advertising budget has dropped to about 7% or $38 billion this year. Meanwhile, traditional advertising campaigns have risen to a 29% share.

Blackfriar head Carl Howe says, by the end of the year, we will have seen advertising budgets shrink overall to only $218 billion. In 2005, the overall ad spend was about $245 billion.

Why the drop? It is a side effect of outside forces – fuel prices, Hurricane Katrina in 2005 and the war in Iraq, he says, have strained corporate budgets causing them to tighten their belts.

According to MediaPost, Howe says, slashing online budgets is not smart, “Because Internet advertising promises more accountability and transparency in ROI calculations.”

Tags: advertising spending, online advertising

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