Search Engine Ad Spending Forecast Up 39 Percent in '07

According to the second annual report on ad spending from Outsell, Inc., U.S. advertising is expected to grow 5.8 percent in 2007. The national study of advertisers, controlling about $6.5 billion of spending, shows that companies plan to increase their online spending by 18 percent this year, faster than for any other major media type. Advertisers also plan to raise their spending for advertising on search engines by 39 percent, the fastest of any online media method.

The survey of 1,010 advertisers and media types including online, print, events, TV/radio/movies, an overview of the reported findings includes:

• While the largest recipient of ad dollars (40 percent), print advertising will continue to lose share as online's share grows to 20 percent
• Online advertising spending for pay-per-click (PPC) ads will fall one percent in 2007, while cost-per-action ads' share will grow eight percent and online sponsorships' share will rise 12 percent (
• Forty-nine percent of advertisers have reduced or plan to reduce their PPC spending because of click fraud, up from 37 percent in the Spring of 2006. Advertisers rate online advertising very effective for branding, contrary to common wisdom that online is effective at generating leads, but is weak for branding(
• The share of TV/radio/movie ad spending will decline about 3.5 percent this year. Advertisers are redirecting more trade magazine ad dollars to events than they are moving to paid search

For more information on obtaining the complete report, please visit Outsell here.