Online Ads Nip at Traditional Media

NOVEMBER 13, 2007

The Trad Four are treading water.

Internet advertising contributes more to total media spending every year.

According to eMarketer projections, that share will reach 7.4% in 2007, more than one in 10 dollars in 2009 and at least 13.3% by the end of 2011.

"Shifts among marketers away from traditional media would make US advertising growth flat-line without the Internet," said David Hallerman, senior analyst at eMarketer.

The Internet's share of ad spending has gained over radio's share in particular, according to TNS Media Intelligence. The research company's data for the first six months of 2007 showed radio with 7.1% of US ad spending, compared with 7.6% for the Internet.

TNS does not count paid search, which accounts for 40% of the online ad market. If paid search were included, the gain over radio ad spending would be even larger.

The increased spending on online ads is coming from a mix of additional allocations and budget shifts from other media, and TV may be in for the largest losses.

Among the largest companies, 42.4% of marketing executives told BusinessWeek that TV would take the biggest hit in ad budgets in the next few years.

Considering that total TV advertising in 2007 will range between $67.8 billion (Universal McCann) and $75 billion (Morgan Stanley), a 10% spending shortfall would represent about $7 billion.

"However, all that money is not going onto the Internet," Mr. Hallerman said.