INSIGHTanalysis: Media Healthcheck – September 2005
During September, internet uptake and consumption was central to the media industry, with a number of reports showing strong growth for the platform and discussing the implications this has on the advertising world.
US analyst, eMarketer, showed that adoption of the internet amongst children and teenagers is causing advertisers to change their marketing technologies and communications in order to reach their target audience, with the age group representing a vibrant and exciting online market (see Younger Generation Changing Online Marketing).
As a result of these shifts in adspend, eMarketer has predicted that online adspend in the US will pass $10 billion for the first time this year, reaching $12.9 billion by the end of 2005. Businesses are projected to spend nearly $10 billion more on internet advertising, hitting a total of $22.3 billion in 2009 (see US Online Adspend To Hit $12.9 Billion In 2005).
Online sales are also expected to rise, with Forrester Research forecasting internet retail in the US to reach $329 billion in 2010, up from $172 billion this year and accounting for 13% of total US retail (see US Online Sales To Hit $329 Billion In 2010).
The strong performance of the online advertising and retail sector is mirrored in broadband penetration, with Point Topic showing that global broadband lines reached 176 million during the second quarter of 2005, a rise of 16% from 152 million lines at 31 December 2004, with the total number of lines added between the end of 2004 and Q2 2005 reaching 24.3 million (see Global Broadband Lines Hit 176 Million).
UK broadband adoption is also showing strength, with Continental Research’s Internet Report Autumn 2005 revealing the number of homes with internet access has risen by 6% in the last year, with 1.5 million new homes coming online, taking the total of users in the UK to 14 million, or 56% of the population (see UK Internet Adoption Continues In Strength).
The increasing prevalence of online in the media mix has resulted in internet advertising revenues for the first six months of 2005 reaching a new record, totalling $5.8 billion an increase of 26% year on year, according to the latest figure from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PWC) (see Record Online Adspend For First Half Of 2005).
Meanwhile, digital television also came to the forefront during September, with Ofcom revealing that 63% of UK households have some form of multi-channel device. The number of Freeview only homes was shown to have grown to almost 5.17 million by the end of June, while BSkyB added 75,000 subscribers during Q2 2005, bringing its total to just over 7.4 million by the end of Q2 2005 (see UK Digital TV Penetration Hits 63%).
Leading on from Freeview’s strong growth, a separate study published by media consultancy firm, Spectrum Strategy forecast the platform to overtake BSkyB as the UK’s leading digital television medium by 2010 (see Freeview To Overtake Sky By 2010).
Elsewhere within the advertising industry, media agency Carat, upgraded its 2005 global advertising expenditure forecast to 5.2% up from the previously predicted 5% during September, and confirmed industry opinion that marketers are increasingly shifting their budgets to the internet (see Carat Upgrades 2005 Global Adspend Forecast To 5%).