The US looks set to spend $7.6 billion on online advertising by the end of 2004, with Europe on target to hit $2.8 billion, says research analyst Jupiter Research.
With growth rates outperforming all other advertising channels, 2004 has been a extremely positive year for the online media industry, with investment in online advertising and media owner revenues having grown substantially. The US is up 20% year on year, while Europe has recorded a growth of 35% compared to 2003.
Paid search has been the fastest growing and most dynamic area of online advertising in 2004 and will continue to lead the field in 2005. Key winners in next year’s market will be Internet portals, such as AOL, MSM and Yahoo.
Jupiter has forecast that the cost of implementing and managing campaigns looks likely to grow in 2005, resulting in the cost efficiency of digital media being harder to achieve, due to increasing competition between marketers to attract online consumers. This will see advertisers increasingly adopting high-rich media formats to differentiate themselves and with rising prices and broadening campaign activity, maximizing efficiencies and optimising will become even more important.
Online consumer technology is growing more sophisticated and advertisers will have to work against users adopting ad-blocking software and complying with increasingly stringent rules regulations and best practice codes.
For 2005, Jupiter warns marketers that they should concentrate on improving campaign targeting and relevancy and that behavioural targeting and auto- optimizations technologies will see growing interest.
Jupiter’s US and European online adspend forecasts follow UK predictions, from the Internet Advertising Bureau and PriceWaterhouseCoopers, that claim online advertising expenditure is likely to overtake that of radio by Christmas, following a period of sustained growth(see Online Adspend To Overtake Radio By Christmas).
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