An annual survey of projected advertising spending reveals that the online world will attract 20% of the advertising dollars spent in 2007, up from 18% last year. Meanwhile, spending on TV, radio, and movie ads will drop 3.5%. (I’m especially glad to hear this about movie ads. I hate spending $10 to get into a flick only to have to sit through a commercial.) Print advertising, on the other hand, is expected to hold steady with 40% of advertising spending in the U.S.

Not everything is rosy for all online advertising. Pay-per-click is expected to drop 1% over concerns about click fraud. Nearly half the advertisers participating in the survey say they’ll reduce their investment in pay-per-click. Things are brighter for cost-per-action advertising, which should rise 8% while online sponsorships are expected to jump 12%.

The survey, conducted by Outsell, was reported in ClickZ Stats.

More than just signifying advertisers are growing more enamored of the online space, the increase in online ad spending at the expense of traditional channels suggests that TV, radio, and the like simply don’t work as well as they once did, while advertisers are seeing better results from their online efforts. The move away from pay-per-click suggests advertisers are assessing exactly what does work best and making adjustments based on those results.