As internet usage grows, the medium is set to take a growing share of total advertising spend over the next several years, according to a report from JPMorgan, as covered by Jack Myers Report.
Looking at the US market, the report predicts that as advertisers look to reach consumers in what is an increasingly fragmented media environment, the growing number of internet users – and the increasing amount of time they spend online – will be very difficult to overlook by the advertising community. The report notes that increased internet use will most likely come at the expense of other media consumption.
Historical data show that media which grow their share of usage usually see an accompanying rise in share of total advertising dollars and vice versa. For example, US publishing’s share of media usage has dropped from 8,1% in 1990 to 6.6% in 2001; its share of adspend has declined from 31.9% to 25.6% over the same period.
Radio, says JPMorgan, is the only medium to buck this trend, with share of media usage in 1990 of 34.8% falling to 27.5% in 2001, while its share of total advertising has increased from 6.7% to 7.8% over the period. This is attributed to radio’s presence in the car, where around 50% of listening occurs. In addition, radio has suffered less audience fragmentation than either television or print.
JPMorgan expects online usage to grow at a 5.0% compound annual rate over the next five years, to reach around 35 minutes per day, which should allow the medium to capture a greater share of total US advertising spending. With online usage projected to increase to nearly 6.0% of total media usage by 2007, the broker expects that the internet’s share of advertising will rise to about 3.1% in 2007.
However, recent figures from the Internet Advertising Bureau (IAB) show that US online spend fell by 18.0% during the first quarter if this year (see US Internet Adspend Continues To Slide).
