Long-Term US Online Ad Forecasts From Jupiter Research
US online advertising is set to grow to $14.0 billion by 2007, up from $5.6 billion this year, according to the latest set of forecasts from Jupiter Research. Following three years of relatively flat growth, spend is set to pick up in 2003, showing 10.8% growth, driven largely by classified ads.
“Publishers and advertisers realise that classified ads are uniquely suited to the internet, due mainly to the need for indexing and searching and consumers’ desires to see more information and images than can fit in the limited space of a print listing,” says the study.
An increase in the penetration of US online households, from 62% in 2002 to 78% in 2007, is helping to drive the growth. In addition, the amount of time users report spending online is increasing (on average, 14 hours per week – on par with time spent watching television, according to Jupiter).
Jupiter says that traditional advertisers will play a key role in the online ad market rebound during 2003 and beyond. “Product category is the best determinant of the size of advertisers’ online investments and the prominence of online ads in their media mix,” says the report.
For example, the highest-spending category in the US is automotive, which will account for $2.1 billion in online ad spending in 2007. However, that figure represents only 8% of what this industry will spend on offline advertising. By comparison, the electronics sector’s $3 million spend on online advertising is 15% of such companies’ offline ad spend.
Online’s share of the pie Despite solid growth, internet advertising will only account for a small percentage of the total US ad spend. By 2007, it will take a 6.1% share of the pie, up from 3.0% by the end of this year. Jupiter claims that this small scale will make the medium proportionally more competitive than the big money media of television and radio.
Rich media to grow Rich media advertising is set to take more and more of the online spend, particularly as the number of homes with broadband access continues to grow. By 2007, 45.8% of the 89 million online homes in the US will be connected via broadband, as shown.
During this time, rich media ads will rise from 6.6% of total online spend in 2002, to 34.1% in 2007. “Rich media ads are gaining momentum, taking share directly away from low-producing, low-ticket conventional advertising,” says the report.