LIVE FROM JUPITER ADVERTISING FORUM: Online Ads to Rebound

Good news abounds about online advertising. Two studies released Wednesday at the Jupiter Media Metrix Online Advertising Forum in New York, predicted that dark clouds over the online advertising industry are sure to clear and be replaced by sunny opportunities.

In one study, sponsored by interactive technology and marketing solutions company 24/7 Media Inc., more than 26% of marketers surveyed believe that online advertising is effective based on past experience. Interactive media marketing has matured from a testing or “trial by error” phase into a building phase in which decision-makers grow budgets based on past campaign successes, the marketers told 24/7.

More than two-thirds of the respondents expect to increase their online budgets over the next 12 months, 24/7 reported. Some 42% will spend more than $100,000.

Not surprisingly, older marketers (those who have been in the business seven years or more) are the most optimistic about the future.

24/7 sponsored the study, and partnered with Jupiter for survey design, data collection and analysis. More than 500 Internet marketing decision makers in North America were surveyed over the last six weeks to find out what they think about online marketing and what lessons they’ve learned. These results were just a taste of the study’s complete conclusions, which will be released in late September.

Meanwhile, Jupiter released its own study saying that while online ad spending in the U.S. will increase only 5% in 2001, it will rebound and grow at a compound rate of 22% over the next five years–to reach a total of $15 billion by 2006. Digital marketing initiatives, however, such as coupons, promotions and e-mail will surpass that of advertising and reach more than$19 billion during the same period.

Advice to marketers is predictable: diversify, diversify, diversify.

Also, traditional advertisers present the greatest opportunity to struggling ad sellers, Jupiter analysts advised. Pay-per-performance advertising will experience only slow growth over the next five years, increasing to 30% by 2006 from 22% in 2001.

Online advertising will account for 7% of total advertising in 2006–up from 3% in 2001.

With bankruptcies and layoffs and the survivors struggling to stay afloat, all this expected growth is a little hard to stomach. One can’t help but have an eerie sense that the emperor has no clothes.