The online advertising channel is now used by 80 percent of advertisers, higher than previously reported, and adoption will surpass 90 percent in 2008, according to a study by research and advisory firm Outsell, Inc. Its "Annual Ad Spending Study: Where and Why Advertisers are Moving Online" is based on a national survey of 1,200 advertisers that control an estimated $2.4 billion in ad spending.

Outsell projects that total online marketing spend will grow 19 percent in 2006, eight times the rate for TV ads and six times the rate for print ads. Spending on search engine advertising is projected to grow 26 percent in 2006.

Another major finding of the study is that the "unprecedented power" that online advertising has provided to smaller businesses has resulted in a shift away from traditional media, according to Outsell.

"Companies with ad budgets of less than $1 million are shifting more of these budgets to high-ROI online ad options. En masse, these smaller companies are denting the bottom lines of television and radio stations, as well as print media," said Chuck Richard, vice-president and lead analyst, Outsell.

However, for both branding and lead generation, "old media" - trade magazines, events, and direct mail marketing - are rated the top three most effective tactics.