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.

These estimates are in line with previous industry thoughts, with the internet expected to lead 2005 in terms of advertising, with predictions from media commentary group Jack Myers predicting a 30% increase in global online adspend in 2005. Carat has also predicted a 38.1% growth, while Universal McCann forecast an upturn of 25%. Analysts Merrill Lynch were slightly more conservative in their forecast, estimating a 19.4% growth rate in 2005 (see Internet Boosts US Adspend For 2005).

Daily newspaper sites remain the largest single shareholder of local internet advertising, retaining a 39% holding and predicted to maintain their share amid the brisk growth. This is in line with Borrell’s previous predictions on the growing strength of the online newspaper industry, which they attributed to newspapers using the internet to bolster sagging print classified revenues(see Online Revenue Is The ‘Botox’ Of Newspaper Industry).

Local broadcast TV stations gained share in 2004 because of aggressive programs aimed at automotive and health care, but still hold less than a 5% share. Internet Yellow Pages appears to have slipped in adspend, perhaps due to paid search.

Borrell Associates will release more data in early March, after the completion of their annual survey on local internet media.