Online ad spending rose 17.8 percent in 2006, as major marketers continued to reduce spending on newspapers, according to a study by Wachovia Equity Research written up by E&P. Wachovia researcher John Janedis and his team looked at 100 leading national advertisers to measure the migration of ad revenue from traditional media to the web. Wachovia examined advertisers in financial services, automotive, retail, telecommunications, general services, media and tech/internet.
Collectively, newspapers saw those advertisers decrease their ad spending by 14.3 percent last year with only financial services increased their spending on newspapers. Newspapers used to be able take solace from other traditional media forms that were in the same boat but Wachovia’s research found that TV managed to reverse the drift of revenue to new media with four of the seven categories, namely telecommunications, automotive, media and, curiously enough, tech/internet. Overall, leading advertisers raised their spending on TV by 4.4 percent.
Keeping in mind that the newspaper sector is still more profitable than the web, Wachovia estimated that online advertising would have to grow 15 percent per year over the next decade to reach the ad dollars spent on newspapers (or about $35 billion). But even if it doesn’t maintain those levels, the report acknowledged that online media will have continue to siphon ad dollars away from traditional media.