Spending on online advertising surpasses TV, report says

Everyone knows that online advertising keeps growing and growing. But according to a report being released today, it's growing so fast that in 2008 it is projected to surpass ad spending on TV, radio and movies combined for the first time ever. 

To be sure, Outsell Inc., based in Burlingame, Calif., tallies the numbers a little differently. It counts the money companies spend on their own websites as part of their advertising budgets, because websites are ostensibly used for marketing. Its data indicates that companies are expected to spend $105.3 billion online in 2008, which beats the $98.5 billion they’re projected to spend on TV, radio and movies. But that isn’t quite as much as the $147 billion they’re likely to spend on print media, up 12% from the previous year.

Much of the report is pretty wonky, unless you’re interested in tracking cost per lead and conversion rates, whatever those are. But the overall picture is interesting. For instance: online advertising is expected to grow 12.3% in 2008, but much of that money will be spent on companies’ own websites, rather than on marketing agencies or search or display ads. That’s not good news for advertising agencies, said Chuck Richard, Outsell’s lead analyst.

“For more than decades, media companies have been the channels for advertisers to reach audiences,” he said. “Suddenly companies don’t rely completely on them.”

The 1,088 US-based companies surveyed will spend $61.5 billion, or 61.8% of their online advertising and marketing budgets, on their own sites, siphoning away money from other options, he said.

The report does predict that advertisers will still spend the most money on print media in 2008 – but it’s not a shining ray of hope for the newspaper industry. Companies will spend 35.5 percent of their budgets on print media in 2008, and will spend nearly a third of that on newspapers. That’s down 4 percent from the previous year.

--Alana Semuels

Semuels, a Times staff writer, covers marketing and the L.A. tech scene.

Photo: Ad spending online is approaching ad spending in print. Credit: Mark Lennihan / AP