Media Buyers To Double Their Interactive Advertising Spending By 2005.

Advertising agencies have been hesitant to embrace interactive advertising, but these agencies will increase their spending, and U.S. interactive advertising revenue will exceed $8.6 billion by 2005, according to GartnerG2, a research service of Gartner, Inc. In 2003, interactive advertising revenue is projected to reach $8.43 billion.

Although chief media buyers at advertising agencies are using interactive advertising more frequently, 60 percent of these chief media buyers claim interactive advertising is not as effective as traditional media, according to a recent survey conducted by GartnerG2 and the Interactive Advertising Bureau (IAB).

In March 2003, GartnerG2 and the IAB conducted a phone survey of 52 U.S. media agencies that purchase multiple media types to determine their attitudes toward interactive media.

According to the survey, chief media buyers perceive the primary strength of interactive advertising to be to drive sales and traffic. This contrasts with their perception that traditional media’s primary strength is to increase brand awareness and position products.

“A fundamental shift in these perceptions needs to occur for interactive advertising to substantially grow its share of the overall ad budget,” said Denise Garcia, principal analyst, Media and Advertising for GartnerG2. “Until interactive advertising can demonstrate an ability to deliver on brand awareness and product positioning campaigns, dollars will not begin to shift from traditional to interactive, and growth will be incremental.”

GartnerG2 analysts said that this shift may not be as difficult as it seems. Agencies are still skeptical, but they plan to increase their spending on interactive advertising.

“Some of this increase in spending could be due to greater total ad spending and higher rates charged for targeted advertising, which is now more readily available due to technology improvements,” Garcia said. “Either way, once agencies increase their spending, they will also increase their experience levels. And experience is the primary reason agencies develop positive perceptions toward interactive.”

According to the survey, large agencies ($500 million or more in gross billings) are more likely to recommend interactive advertising than small agencies (less than $50 million). Among large agencies, 67 percent recommend interactive media. If they are not already recommending Internet, 5 percent plan to by the end of 2003, and 10 percent plan to after 2003. Small agencies are not as enthusiastic in their recommendations, with 53 percent currently recommending interactive, 19 percent planning to by the end of 2003 and 10 percent after 2003.

Interactive advertising is defined as all forms of online, wireless and interactive TV advertising, including banners, sponsorships, e-mail, keyword searches, referrals, slotting fees, classified ads and interactive television commercials.

For more information at http://www.gartnerg2.com