US Online Adspend To Exceed Dotcom Levels By 2005, Says eMarketer
US online advertising spend will soon surpass the levels seen during the dotcom boom, following a dramatic swing back into positive growth this year, according to a report from eMarketer.
In its report, eMarketer points to a number of reasons for this return to strong growth. One key growth area is paid search, to which more and more businesses are turning for direct response marketing. In addition more companies are using the internet as part of integrated branding campaigns.
The use of online media is also being boosted by the rapid rise in broadband users and the deployment of rich-media content which broadband services allow. As demand for online space rises, so will the premiums that advertisers will pay, particularly for popular sites; this in turn will drive up overall spend.
These factors are expected to contribute to double-digit growth between 2003 and 2005, before the growth rate settles down to high single-digits in 2006 and 2007.
Quarterly growth trends The report says that quarter by quarter growth rates show a market “first buffeted by an overreaction to the burst of the internet bubble combined with a recessionary economy.” Spending fell in every quarter from Q1 2001 through to Q4 2002 in a year on year analysis, with a turnaround coming in Q1 2003, when spend rose by 7.4%.
Data from the Internet Advertising Bureau and PricewaterhouseCoopers show that the first three months of 2003 have not been as strong as Q4 2004, although the industry has remained on a steady growth trajectory.
Total ad market eMarketer has also produced a set of forecasts for the overall US advertising market, which shows how the performance of the online sector compares with broader trends. The US ad market is forecast to rise from $249.2 billion in 2003 to $307.0 billion in 2007.
| US Online And Total Advertising Spend Forecasts | ||
| Online | Total Advertising | |
| 2000 | 8.1 | 247.5 |
| 2001 | 7.1 | 231.3 |
| 2002 | 6.0 | 236.8 |
| 2003 | 6.9 | 249.2 |
| 2004 | 7.8 | 268.3 |
| 2005 | 8.6 | 281.0 |
| 2006 | 9.3 | 295.0 |
| 2007 | 9.9 | 307.0 |
| Source: eMarketer, December 2003 | ||
Whilst online’s decline was more severe than the total ad market during the 2001/2 downturn, the sector is expected to outpace total advertising growth between 2003 and 2007. During this period, the online advertising sector’s share of the total market is predicted to rise from 2.8% in 2003 to 3.2% by 2007, as shown below.