Online advertising looks set to increase significantly in 2005, with analysts eMarketer and other research firms predicting a substantial rise in internet adspend in the coming year.
The latest data from eMarketer for advertising expenditure in the US reveals that total media ad spending equalled $264.2 billion in 2004, with online advertising comprising $9.5 million, or 3.6% of that total. The US analysts forecast that in 2005, total media adspend will rise to $278.5 billion, with the online segment accounting for $11.5 billion in expenditure, or 4.1% of the total.
Merrill Lynch confirm eMarketers predictions, finding that online advertising accounted for 3.7% of total adspend in 2004, and will constitute 4.2% in 2005 (see US Shifts To Online Advertising). Interactive services firm, Avenue A/Razorfish reported that 32% of the online adverts purchased through the company in 2004 were featured on travel web sites, 15% on health sites, 12% on reference sites and 9% on either lifestyle, news or entertainment sites.
The high percentage of adverts placed on travel sites echoes the increasing popularity of the online travel industry. December 2004 saw a very strong performance in the UK travel sector, with traffic up 20% from the same period in 2003. Based on this year-on-year growth internet intelligence company Hitwise has predicted the travel sector could reach 2.9% market share in January of this year (see UK Online Travel To Equal Best Ever Month).
Market information group, TNS Media Intelligence found, that in 2004, overall adspend grew by 10.6%, with 5.1% growth predicted for 2005, and a strong first half of the year (6.9% growth) making up for a weaker second half (3.5% growth, with only 2% growth in Q3.)
The internet is expected to fuel growth and is predicted to experience the greatest expansion in adspend, 11.2% of any medium in 2005. However, eMarketer predicts that television growth will reach almost 28% over the next year.
A recent report by media research firm Borrell Associates confirms expectations for the substantial online adspend growth predicted in 2005, but earmarks US local online advertising expenditure to see the largest increase, predicting it will reach $3.9 billion in 2005, enjoying more than twice the growth rate of overall internet advertising (see US Online Adspend To Reach $3.9 Billion In 2005).
The new projections reveal that local online adspend in 2005, will increase by 46% more than 2004, with paid search averaging 8.4% of all locally spent online advertising. Borrell Associates has predicted that paid search will reach $329.5 million in 2005, and that without it local markets would only see a 33.8% increase in adspend this year.
Related Links
