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Online advertising on upswing

Marketers are looking to Net ads as they lose confidence in traditional advertising, study shows.

Spending on online advertising is projected to reach $14.7 billion in 2005, as more marketers lose confidence in the effectiveness of traditional ads, according to new research.

That growth represents a 23 percent increase from 2004, according to a study released Tuesday by Forrester Research. Nearly all of the marketers surveyed said they plan to cut spending in traditional channels such as print and direct mail to fund increases in online ads.

Nearly 78 percent of those surveyed said they think search engine marketing will be more effective than traditional ads within the next three years; 53 percent said TV advertising will become less effective. The survey covered 99 marketers.

The growing interest in online advertising is not restricted to search engine marketing or display ads. About 64 percent of respondents showed interest in advertising on blogs, 57 percent through RSS (Really Simple Syndication), and 52 percent over mobile devices, Forrester said.

"Despite significant changes in consumer behavior, there is a large disparity between the amount of time consumers are spending online and the money marketers are spending trying to reach them online," Charlene Li, principal analyst at Forrester, said in a statement. "When at-work Internet use is taken into consideration, online consumers spend more than one-third of their time online--roughly the same amount of time they spend watching TV. Yet marketers spend only 4 percent of ad budgets online versus 25 percent on TV."

Online marketing and advertising will grow to 8 percent of total advertising spending in 2010, the researcher said. Search engine marketing will be worth $11.6 billion, while display advertising will touch $8 billion by that year.