U.S. Online Ad Budgets Up 28% This Year: EMarketer

(Promo XTRA) Spending for online advertising in the United States will wind up being almost 27% higher in 2007 than it was last year, according to new findings from marketing research firm eMarketer.

That compares to a total increase in media ad spending of only 2.1%. And next year’s online figure should grow even more.

The forecasts are part of a new study, “U.S. Advertising Spending”, which tracks the course of Internet advertising in this country and relates it to total ad spending. The report predicts that marketers will spend $21.4 billion on Internet advertising in 2007 and may spend $27.5 billion on the Web in 2008. By 2011, eMarketer expects U.S. online ad spending to hit $42 billion.

Those dollar figures will still represent a small proportion of total ad spend, however. Marketers will only direct 7.4% of their budgets to the online sphere in 2007, and next year’s $27.5 billion prediction will still represent only 10% of total U.S. ad spending. EMarketer foresees online advertising reaching 13% of total ad spend by 2011.

The report also finds that growing numbers of marketers are funding those Internet ad budgets with cash shifted from traditional media spends in TV, radio, newspapers and magazines. The top 100 national advertisers (as listed by Advertising Age) spent a total of $230 million less on those old-school media in 2006 than they had in 2005 and increased their Internet ad spending by an aggregate $558 million in the same period, eMarketer found.

According to eMarketer, paid search marketing will make up the bulk of that online ad spending (about 40%) through 2011. Display ads such as static banners will account for almost 22% of spending this year but drop a bit to 19.5% by 2011. But spending on rich media ads or online ads incorporating video will grow from 8.2% of U.S. online spending this year to more than 13% in 2011, the report said.

Spending on other forms of online advertising (classifieds, lead generation, e-mail marketing and sponsorships) will either hold steady or decline slightly over the next four years, according to eMarketer.

The firm is still crunching the numbers on social network advertising, but predicted that U.S. marketers will spend $900 million to advertise on those networks in 2007 and $2.5 billion to do so in 2011.

Downturns in the financial sector will dampen online ad growth in 2007 and 2008, eMarketer predicted. But reduced Internet spending by mortgage companies will be offset by other advertisers’ interest in buying up the low-cost display inventory they’ve traditionally favored.


U.S. Online Ad Budgets up 28% This Year: eMarketer

Spending for online advertising in the United States will wind up being almost 27% higher in 2007 than it was last year, according to new findings from marketing research firm eMarketer.

That compares to a total increase in media ad spending of only 2.1%. And next year’s online figure should grow even more.

The forecasts are part of a new study, “U.S. Advertising Spending”, which tracks the course of Internet advertising in this country and relates it to total ad spending. The report predicts that marketers will spend $21.4 billion on Internet advertising in 2007 and may spend $27.5 billion on the Web in 2008. By 2011, eMarketer expects U.S. online ad spending to hit $42 billion.

Those dollar figures will still represent a small proportion of total ad spend, however. Marketers will only direct 7.4% of their budgets to the online sphere in 2007, and next year’s $27.5 billion prediction will still represent only 10% of total U.S. ad spending. EMarketer foresees online advertising reaching 13% of total ad spend by 2011.

The report also finds that growing numbers of marketers are funding those Internet ad budgets with cash shifted from traditional media spends in TV, radio, newspapers and magazines. The top 100 national advertisers (as listed by Advertising Age) spent a total of $230 million less on those old-school media in 2006 than they had in 2005 and increased their Internet ad spending by an aggregate $558 million in the same period, eMarketer found.

According to eMarketer, paid search marketing will make up the bulk of that online ad spending (about 40%) through 2011. Display ads such as static banners will account for almost 22% of spending this year but drop a bit to 19.5% by 2011. But spending on rich media ads or online ads incorporating video will grow from 8.2% of U.S. online spending this year to more than 13% in 2011, the report said.

Spending on other forms of online advertising (classifieds, lead generation, e-mail marketing and sponsorships) will either hold steady or decline slightly over the next four years, according to eMarketer.

The firm is still crunching the numbers on social network advertising, but predicted that U.S. marketers will spend $900 million to advertise on those networks in 2007 and $2.5 billion to do so in 2011.

Downturns in the financial sector will dampen online ad growth in 2007 and 2008, eMarketer predicted. But reduced Internet spending by mortgage companies will be offset by other advertisers’ interest in buying up the low-cost display inventory they’ve traditionally favored.

For more coverage on research