The rapid growth in online advertising is to set to start chipping away at the revenues of traditional marketing tactics, with direct mail first in line. These are the findings of Online Advertising Grows Up: Exploiting A New Marketing Medium, a new book-length report by Fletcher Research. Fletcher predicts that online advertising, which is set to grow from £50 million last year to £625 million in 2004, will impact direct mail more heavily than the other traditional marketing methods. Companies that are currently advertising online will increasingly do so, leading to a 33% fall in direct mail expenditure by 2004, says the report.
Other advertising media will also be affected over time as the internet increasingly takes spend from outdoor and radio, with a dent beginning to show in press advertising in the next four years. Caroline Sceats, an analyst at Fletcher, says: “The internet will win because of the precision targeting it offers advertisers. However, targeted online advertising requires media owners to better understand their users, and advertisers should insist that they are provided with consistent and measurable audience data.”
The Fletcher report claims that internet-only companies will initially rely heavily on television and press to build their brands, but that once they are established, more investment in online advertising will be needed. The percentage of budget committed by dotcoms to online advertising will need to increase significantly, says Fletcher, predicting that total online adspend by internet-only companies will rise from the current £24 million to £285 million by 2004. This will account for 35-40% of the overall ad budgets of these companies.
