MORE MARKETING BUDGETS SHIFT MONEY ONLINE

Advertising Week Buzzes About Growing Impact of Internet

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NEW YORK (AdAge.com) -- Positive projections for the growth of Internet advertising revenues made the subject of online marketing budgets a top discussion point in seminars and corridors
throughout the five days of Advertising Week in New York City.

The discussion last week was spurred by the cross-pollination of information and upbeat attitudes coming from the advertising executives in town for Advertising Week and who also attended the two-day Interactive Advertising World Conference Sept. 20-21.

43% spike
A new study presented at the conference from the Interactive Advertising Bureau and PricewaterhouseCoopers showed interactive revenue in the second quarter spiking 43%, to $2.4 billion, from the prior-year period. And an analyst at Piper Jaffray forecasted online advertising will sustain double-digit growth over the next five to seven years.

"My general perception is that [online ad] budgets are going up," Sarah Fay, president of Aegis Group's Carat Interactive, a media-buying agency, said during a panel discussion at the conference. Jens Thraenhart, director of internet strategy for Fairmont Hotels & Resorts, said the 43 hotels in Fairmont's network "want to shift money to the online channel."

Mainstream marketers increasingly are moving some money out of other parts of the advertising budget to beef up the online portions of their campaigns. "Marketers are shifting dollars from network TV and print," said David Cohen, senior vice president of interactive media at Interpublic Group of Cos.' Universal McCann. But he pointed out that one had to maintain perspective. "When we are talking about shifting $400,000 out of a $600 million budget, [the actual online increases are] miniscule," he said.

Media planning changes
The consensus of the week's panels was that marketers are beginning to manage their media planning and buying strategy as a whole, rather than as segregated channels. The move clearly benefits online advertising.

"I am trying to educate people to see it as a set of 'and,'" said John Stichweh, section manager of interactive marketing for the global beauty business unit of Procter & Gamble Co. "It's going to be TV and print and interactive."

Marketers are also spending more for brand building campaigns online, said Carat's Ms. Fay. This is partly because online brand metrics are now available from interactive market research firms such as Dynamic Logic. Adidas, she said, plans to increase its budget for interactive by double digits next year, following the success of its "Impossible Is Nothing" campaign, which was its largest online effort to date. The effort, which Carat Interactive handled, featured an online ad of a young Muhammad Ali boxing with his daughter, Laila Ali. Consumers clicked into the online video ad 5 million times, she said. (The ad also ran on TV.)

Following consumers online
In putting the focus online, marketers are following consumers. All age groups up to age 54 now choose the Internet as their top media choice, according to the Generational Media Study, released by the Online Publishers Association at Advertising Week. More than 70% of three age groups studied use the Internet for entertainment, and 67% of 25- to 34-year-olds and 35- to 54-year-olds said content on the Internet provides them with useful information about products and services.

Consumers find the Internet indispensable, according to the Internet Deprivation Study presented at the conference by Yahoo! and OMD, the media buying and planning arm of WPP Group. When 28 people promised to stay off the Internet for two weeks (they got $150 to do so), they struggled to figure out how to pay bills, make vacation plans, take work breaks, read the news and keep in touch with friends. Nearly half of the respondents said the Internet had become so pervasive in their lives they relied on it to manage personal and professional relationships.

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