Rapid Revenue Growth of Net Ads
Latest Web Technology & Web Design News, May 2, 2005

May 2, 2005

Internet ads are expected to grow by 33.7% this year, but eMarketer sees annual online ad-revenue growth slowing for the remainder of the decade.
By Eric Chabrow

Slow growth -- whether among individuals or institutions -- is a sign of maturity. One sign of the Internet's maturity is predicted slower annual growth in the amount companies will spend to advertise their goods and services online.

According to an analysis by research firm eMarketer of data from the Internet Advertising Bureau and PricewaterhouseCoopers, online advertising in the United States grew by 32.4% last year and will grow by 33.7% this year. EMarketer predicts annual growth will remain in double digits through the remainder of the decade, but says the increase will be less than it's been in the past. Online ad spending will grow by 21.2% next year, 14.1% in 2007, 13.5% in 2008, and 10.4% in 2009, predicts the firm.

Online advertising will rise to $12.9 billion this year, eMarketer estimates, up from $9.5 billion in 2004. In 2009, eMarketer estimates online ad spending at $22.3 billion. That's a 72.8% rise over the 2005 estimate.

"Interactive advertising has clearly become a mainstream medium and one that can no longer be ignored as a critical piece of any marketing mix," Greg Stuart, CEO of the Internet Advertising Bureau, said in a statement. "Interactive is firing on all cylinders, including display, search, and classifieds, and is squarely on track to surpass consumer-magazine revenues."

Increased online advertising was evident across all types of formats: search, classifieds, display, and rich media all grew at a healthy rate, eMarketer reports. Only E-mail ads and slotting fees -- the fee charged for premium ad placement and/or exclusivity -- fell year-to-year, but eMarketer projects both areas will recover.

Consumer advertisers continue to represent the largest category of advertisers, accounting for 49% of 2004 annual revenue, up from the 37% last year. The largest categories under the consumer umbrella include retail, automotive, leisure, entertainment, and packaged goods. As a% of 2004 total revenue, computing and financial-services account for 18% and 17%, respectively, with telecom and pharmaceutical and health care rounding out the total at 4% and 6%, respectively.