US Online Adspend Estimated To Grow This Year
Total US internet ad spending is estimated to reach $16.4 billion this year, a 30.8% gain over last year’s $12.5 billion, according to a new report from eMarketer.
Impressive results will continue in 2007, with total US online ad spending reaching $19.5 billion. However, at 18.9%, the growth rate will clearly be more modest, adds the online market research specialist.
This will be due to overall economic weakness, with US real GDP growth expected to fall from over 3% in 2006 to around 2% in 2007. However, growth in online ad spending will be 17.5 percentage points higher than growth in total US ad spending (set to grow by only 1.4% next year).
Steve Fredericks, the president and CEO of TNS Media Intelligence, told eMarketer in early December, “We see GDP remaining sluggish at least through the first half of 2007.”
US real GDP growth is likely to be closer to 3% in 2008. Online ad spending will also rebound with a 22.1% increase over 2007, to reach a total of $23.8 billion.
With political races increasingly dependent on internet communications and with the 2008 election expected to be hotly contested, a significant chunk of what was a $3.14 billion political advertising market in 2006 (according to PQ Media) will go online. In addition, the 2008 Summer Olympics will also help support an internet ad-spend uptick, says eMarketer.
Earlier, more conservative ad spending estimates, including those from eMarketer which put the 2006 total at $15.9 billion, were coloured by Yahoo!’s relative weakness. This will see the company’s ad revenues grow by only 17.5% this year, compared with a 37.3% increase in 2005.
Whilst Yahoo!’s anticipated 2006 US ad revenues will account for 17.5% of the total US internet ad market in 2006, that share is a nearly two-point drop from last year’s 19.4% figure.
EMarketer says that in September it expected that the Yahoo!’s revenue wobble would ripple across the entire market. Subsequent data has shown this effect to have been very limited. For example, the Interactive Advertising Bureau and PricewaterhouseCoopers third-quarter figure of nearly $4.2 billion in online ad spending represents a gain of nearly 33% over the third quarter of 2005.
The implication is that Yahoo!’s losses have been gains for other sites; not only Google, but competing portals such as AOL, which posted 46.0% worldwide ad revenue growth in the third quarter and is expected to increase US online ad revenues by approximately 40% in 2006.
Meanwhile, Universal McCann is projecting US advertising expenditure in 2006 to total $285.1 billion, a gain of 5.2% over 2005 (see Modest US Ad Growth Predicted For 2007).
In addition, Merrill Lynch’s annual bottom-up analysis predicts that ad spending in the US will increase by 2.6% in 2007 (see Modest US Ad Growth Predicted For 2007).