Web advertising to 'defy' economic crisis

New marketing dollars head online

Robert Jaques, vnunet.com 02 Jun 2008

Experts predict that internet advertising in the US will continue to "grow fast" in the face of an economic downturn that will force a reduction in overall ad spending.

IDC forecasts that current economic conditions will accelerate the transfer of marketing budgets from traditional to new media.

Internet advertising will grow about eight times as fast as advertising at large between 2008 and 2012, according to the analyst firm, while revenue will double to $51.1bn.

This growth means that the internet will go from the number five to the number two medium in just five years, making it bigger than newspapers, cable TV and broadcast TV and second only to direct marketing.

Video advertising is expected to be the principal disruptor of internet advertising over the next five years by attracting the most new marketing dollars.

This revenue will grow sevenfold from $500m in 2007 to $3.8bn in 2012 at a compound annual growth rate of 49.4 per cent.

IDC puts this expected growth down to brand advertisers shifting significant amounts of money into video commercials, primarily from broadcast television and to a lesser extent from cable television.

"The size of the online video audience, and the time it spends watching video, is sure to increase as broadband penetration increases, connections become faster and more premium content becomes available," said Karsten Weide, programme director for digital media and entertainment at IDC.

"Consumers are also starting to realise that, as opposed to TV, internet video lets them watch what they want, when they want, and increasingly where they want."

Search advertising, according to the research, will remain the one format that will garner the most revenue over the forecast period in the US.