Online advertising expenditure is forecast to hit $18.9 billion by 2010, up 59% from $11.9 billion this year, according to the latest estimates from Jupiter Research.
In its new report,
US Advertising Forecast, 2005-2010, Jupiter projects spending on search to account for $7.5 billion by 2010, with marketers estimated to invest $4.5 billion on streaming and rich media, and $4.1 billion on classified advertising in 2010.
In contrast, Jupiter claims that this year, online marketers are expected to spend $5.1 billion on display advertising, $4.2 billion on search and $2.6 billion on classified.
Expansion in the online market is likely to occur steadily over the next five years, with Gary Stein, lead analyst of the new report saying: “This growth will be steady and consistent, rather than filled with spikes or valleys. The steady growth reflects the stability of the industry, both in terms of the players involved and their business practices.”
The increase in popularity of search advertising will be mirrored in pay-for-performance pricing models, according to Jupiter. Currently 40% of online adverts are purchased on a cost-per-thousand impression basis, with the research specialist predicting that just 28% will be priced on a CPM basis in 2010.
Jupiter forecasts that marketers will cut back on their use of banner adverts and increase their use of streaming media, behavioural targeting and mobile adverts. Jupiter found that 68% of 464 advertisers surveyed reported they had used banner ads in the last 12 months, but just 58% claimed to use them this year.
Streaming formats are expected to enjoy an increase in use, with 26% of advertisers planning to use them next year, compared to just 13% using them this year. Behavioural targeting was employed by 7% of surveyed advertisers last year, while 13% plan to incorporate it into their campaigns this year.
Financial services company, Goldman Sachs has predicted 2005 to be a bullish year for online advertising, forecasting the market to increase by 28% year on year, to reach $12.3 billion (see Goldman Sachs Predicts Online Adspend To Rise By 28% In 2005).
Forecasts released earlier this month by Forrester Research are more optimistic than Goldman Sachs, predicting online adspend to reach $14.7 billion this year, a 23% increase on its 2004 estimates (see US Online Ad and Marketing Spend To Reach $14.7 Billion in 2005).
Analyst eMarketer’s predictions are closer to Goldman Sachs’, projecting online advertising to hit $12.9 billion in 2005, a 34% rise on eMarketer’s 2004 forecast (see Online Adspend To Hit $13 Billion In 2005).
Jupiter Research also reported that consumers between 25 and 44 spend more time online than watching television.
A recent study from Packaged Facts, a division of MarketResearch.com, confirms this finding, claiming that young audiences in the US are losing interest in television as they get older and switching their affections to the internet (see Young Audiences Shift Interest From TV To Internet).
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