Online Ad Spend – Growth to Slow?

Compiler of Internet trend forecasts, eMarketer.com, estimates that while US online advertising spend has risen by more than 30% each year for the past three, the 2007 increase will be just 19%. Not that that's bad... but it's certainly a change of pace.



The theory is born out by Internet media and MR firm, Piper Jaffray & Co, which predicts that global online advertising revenue will reach $81.1 billion by 2011, representing a 21% compound-annual-growth-rate.

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eMarketer suggests that the knock-on effect of the expected fall in US economic growth will force advertisers to cut their 2007 advertising budgets accordingly. However, the firm's analysts calculate that online ad spending will not experience negative growth for the near future, and the 18.9% growth anticipated this year will overtake all other forms of media spend.

Most researchers expect online ad spending to increase each year until 2011, after which five firms — Borrell Associates, Forrester Research, JupiterResearch, Oppenheimer and PricewaterhouseCoopers — forecast that increased annual growth will slip into single figures for the first time since Internet advertising was born in the 1990s.

However, eMarketer expects annual growth to fall to 13% by the end of 2011. According to the firm's Senior Analyst, David Hallerman, this is based on three premises:

• Even if the economy slows down, the need for advertising to follow the audience will drive an ongoing move away from other media
• The opportunities for improved targeting and more accurate tracking makes spending on the Internet even more appealing in a soft economy
• As online video advertising becomes more widely used, large brands will devote increasingly greater budget to the Internet.

Piper Jaffray has published its projections in its report, 'The User Revolution', which explains the concept of user revolution as the trend whereby consumers take control of content consumption and branding. As Senior Research Analyst, Safa Rashtchy explained: 'The historically passive consumer is changing rapidly, not only becoming more informed and confident about purchase decisions, but also increasingly taking control of the consumption of information and content that used to be distributed by networks, studios, publishers and retailers. Like many major social trends, the changes will not happen overnight and we expect the User Revolution, which has just begun, to last several years before the new regime is fully established and the old statues have all been toppled over.'

e-Marketer and Piper Jaffray are on the net at www.emarketer.com and www.piperjaffray.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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