Online Ads to Crack $10 Billion in 2005

Posted on by Chief Marketer Staff

Online U.S. ad spending is on track to break through the $10 billion barrier and shoot to $12.9 billion, according to a forecast published yesterday by market research firm eMarketer. That represents a 33% increase over 2004’s $9.6 billion spend for Internet ads of all types, and more than double the $6 billion spent in 2002.

Four years down the road in 2009, U.S. companies will spend $22.3 billion in online ads, the report predicts.

“The spending growth is impressive but shouldn’t come as too great a surprise because growth came from such a small base,” said eMarketer senior analyst David Hallerman in a statement. “And in the last few years, the Internet has truly become a mainstream medium. These yearly and quarterly ad spending gains point to a sea change in media usage among marketers.”

Reasons for the continued growth include an overall increase in ad budgets, higher prices for both Internet branding ads and direct response ads such as sponsored search, an increased migration to the Web by companies not now advertising there, and budget reallocation by current Web advertisers opting to spend more ad dollars online.

The eMarketer forecast says U.S. Internet ad spending for fourth-quarter 2005 should reach $3.8 billion. Quarterly historical data from the Interactive Advertising Bureau and PricewaterhouseCoopers shows online U.S. ad spending has posted increases in eight of the last nine quarters.

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