A new report by the Myers Group, a media and advertising market research firm, estimates that online ad spending will reach $32 billion and make up eight percent of the U.S. advertising market by 2005, surpassing even the loftiest forecasts to date.
"Our extremely bullish forecast is based on results of our field research, which point to online's underlying strength as the most highly targeted, most directly measurable and most interactive medium ever," said Jack Myers chairman of the Myers Group.
Internet ad spending is expected to reach $2 billion in 1999 and then grow significantly from 2002 on, according to the survey conducted by the Myers Group. This growth, which covers banners, sponsorships and program associations, is more than three times what the firm predicted for the industry two years ago, Myers said.
"We're seeing a faster adoption rate for the Internet by traditional marketers than we witnessed for cable in the 1980s," Myers said.
Other Internet analysts do not agree with the Myers Group's predictions. Forrester Research, for example, forecasts that online ad spending will have an annual growth rate of 30 percent a year, putting it at $17 or $18 billion by 2005, said Jim Nail, a senior analyst at Forrester.
The Myers Group survey also examined motivation factors in online advertising. For example, the top factors for ad executives in deciding whether to use online advertising are "target audience," "brand building," "electronic commerce" and "audience reach."
There is, however, a high level of dissatisfaction in online advertising efforts, according to the report. About 24 percent of the executives surveyed said they are dissatisfied with the performance of their online ad campaigns, and 28 percent said they were neither satisfied nor dissatisfied.