Jupiter: Online ad spending poised for dramatic rebound

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New York--Online ad spending in the U.S. is set to dramatically rebound and will reach $15 billion by 2006, up from $5.7 billion this year, according to newly released research from Jupiter Media Metrix Inc. Furthermore, online ad spending will account for 7% of the total advertising market by 2006, up from 3% this year, Jupiter projects. Spending on other digital marketing initiatives-including e-mail marketing and promotions-will grow even faster, according to Jupiter. Spending on e-mail marketing, coupons and promotions is expected to reach $19.3 billion by 2006, up from $2.0 billion this year.Jupiter attributes the current slowdown to companies' inability to effectively gauge the Internet's effectiveness or return on investment. "Marketers' inability to evaluate online advertising effectively has led to the current hiccup in spending," said Marissa Gluck, senior analyst. Pay-per-performance advertising, meanwhile, will experience only slow growth over the next five years, according to Jupiter. It will account for just 22% of online ad spending this year and that share will only increase to 30% by 2006, according to the firm. These findings run counter to conventional wisdom, which holds that marketers will increasingly seek to tie their online spending to how much business their ads bring in. Marketers of information-intensive, high consideration products will fuel the coming boom, according to Jupiter. Financial services companies are expected to spend $2.1 billion a year on online advertising by 2006, more than any other business sector. They're expected to spend $1 billion this year.Automotive and media companies will be the next largest online spenders by 2006, spending $2 billion and $1.6 billion, respectively, according to Jupiter.
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