The strength of online advertising expenditure has been confirmed, with web portal Yahoo! announcing that its profits have almost doubled in the last quarter of 2004, making $187 million (£143.2 million).
This validates key industry forecasts that the internet will lead 2005 in terms of advertising, with predictions from media commentary group Jack Myers predicting a 30% increase in global online adspend in 2005. Carat have also predicted a 38.1% growth, while Universal McCann forecast an upturn of 25%. Analysts Merrill Lynch were slightly more conservative in their forecast, estimating a 19.4% growth rate in 2005 (see
Internet Boosts US Adspend For 2005).
Yahoo! has announced a 14% increase in profits year on year, and stated that sales during the last three months of 2004, have amounted to $1,078 billion, a 62% rise on 2003. The company’s net income rose to $373 million during quarter four last year, boosted by the sale of some shares in search engine Google.
In their recent internet portal update report, eMarketer has predicted that US spending on online adspend will be fuelled by the growth of rich media advertising during 2005, forecast to reach $11.3 billion in ad dollars this year, up from an estimated $9.4 billion last year.
This is in contrast to 2004, which saw paid search advertising taking the lion’s share of online ad spending at $3.93 billion. eMarketer still expects paid search advertising to do well in 2005, predicting $4.69 in adspend.
The eMarketer study also examined paid content online and found that, with web advertising enjoying continuing growth, ‘internet users, in general, are not prepared to pay for any news, however there are additional opportunities for paid content, particularly within the entertainment categories of music, movies, games and sports.’
Worldwide, Yahoo! and Google are the biggest online advertising companies, with Yahoo! reporting a 220% rise in revenue from Q1 2003 to Q1 2004 and Google experiencing a 130% increase for the same period.
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