Advertising on the Web Goes Through a Growth Spurt

By January 23, 2007

All recent figures paint the same picture. As more consumers spend more time on the Net, online advertising is taking off, leaving traditional media in the dust. In November, the Interactive Advertising Bureau and PricewaterhouseCoopers announced that Internet advertising revenues had reached an estimated new record of $4.2 billion for the third quarter of 2006, a 33% increase over the same period last year. As Sheryl Draizen, General Manager of IAB put it: “Marketers are experiencing how this medium enhances their ability to target and engage the audience that matters to their brand and then measure its effectiveness in ways no other medium provides.” In a study released in December, research firm eMarketer raised its estimate of online advertising spending, estimating that it would reach $16.4 billion for 2006.

According to the same eMarketer study, advertisers are expected to spend a total of over $281 billion in 2006, about 5.8% of it online. By 2008, the research firm estimates that the size of online advertising will have reached 8.1%. Radio will have been overtaken. Of course, newspapers have been feeling the crunch too with the decline in readership and subsequently ad revenues. TV should be next.

Steve King, worldwide chief executive at ZenithOptimedia, part of the Publicis Groupe, offered a New York Times reporter this prediction : in 2007, Internet ad spending will grow 29 percent from 2006 (he includes search engine marketing in his total). By contrast, he forecasts that traditional media will experience lackluster growth rates: 1.5 percent for local radio and 2 percent for newspapers.

Here are two more nails for the traditional media’s coffin. In early 2006, research firm Jupitermedia released a study showing that the average American online consumers spends 14 hours a week on the Web, the same amount of time they watch TV. Later this year, the firm found that European Internet users spend an average of four hours per week online while they spend just three hours reading newspapers and magazines. The evidence shows that Americans as well as Europeans are moving online. Advertisers are bound to follow them there.

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