Tuesday, July 15, 2008

The IDC Digital Marketplace Model and Forecast shows total worldwide Internet advertising to be $65.2 billion in 2008, growing to $106.6 billion in 2011.

John Gantz, chief research officer at IDC, explained "... (though) Internet advertising is growing at a phenomenal rate, ... (it) is still relatively new and growing from a much smaller base...  By the end of the forecast period, spending for Internet advertising will trail direct mail... by more than $30 billion, while spending on TV and print ads will each be nearly twice as great as for online ads... The long-term opportunity for Internet advertising can be seen in the disparity in per capita spending: total advertising revenues... (are) more than $105 per inhabitant of the planet, while Internet advertising revenues are less than $50 per active Internet user."

In projecting advertising types, the report says:

• Keyword ads will remain the dominant type of Internet advertising throughout the forecast period, capturing more than a third of annual online ad spending worldwide
• Display ads will be the next largest type of Internet advertising, capturing more than 20% of worldwide spending annually through 2011
• Classified is next, with nearly 19% of all online ad spending per year
• Spending in both categories will be pressured by rich media ads, which are expected to grow at a compound annual growth rate (CAGR) of more than 50% during the 2007-2011 forecast period

"Marketers already recognize that online advertising must be incorporated into any comprehensive ad strategy. This will continue to drive growth in online ad spending well beyond the forecast period," said Karsten Weide, program director, Digital Media and Entertainment. "However, there is still a lot of experimentation underway within the category as marketers seek the optimal mix of ad types to reach their target audience. This will fuel spending for all types of online ads."

Additional expenditure highlights from the study include the following:

• The United States will lead the world in both total advertising spending and online ad spending throughout the forecast period with expenditures of more than $265 billion and $45 billion respectively in 2011
• More than $5 billion will be spent worldwide in 2008 in each of the top four categories of online ads - adult content and gambling, information, electronics, and computing. These will continue to be the leading categories in 2011