The Internet advertising market is growing. There’s no doubt about that. The annual amount spent for online advertising in the US climbs higher every year. The latest research from eMarketer.com indicates numbers will top 40 billion dollars in 2014. That’s twice as high as 2009 ad management expenditures, up from 22.7 billion.
Pessimistic analysts and Internet naysayers predicted a decrease in online ad revenues in tandem with the generalized global economic decline. They were wrong. Instead, in 2010, money spent on online advertising has increased by 13.9%. That’s 25.8 billion dollars, in spite of forecasted advertising campaign budget reductions.
So why are we watching online advertising budgets rise while everything else plummets? The answer is pretty simple actually; the number of consumers flocking to the Internet continues to expand. As Internet usage grows, so do ad conversions giving rise to more ad campaigns to reach deeper into the pockets of new audiences.
2010 saw 221 million people surf the Internet on a weekly basis. That’s about 2/3 of the US population (71%). And it ain’t gonna stop there! eMarket researchers project that by 2014, the number of Internet users will climb as high 250 million upping online advertising stakes to more than 77% of the people living in the US.
Sure the Internet is not the only place to run ads, so how are traditional ad markets like print, television and radio faring, as the US increasing turns to the Internet for news and entertainment? In the pie chart below showing total ad delivery, Internet advertising slices out 17.7% of total ad spending, exceeding monies spent on print ads, OOH (out-of-home, billboards, store signs, etc.) and other ad delivery formats. Still, television still holds on with twice the pie spent on Internet ad campaigns.
Money spent on Internet and print ads were almost equal in 2010. It seems though, according to eMarket forecasts, the gap between online media spending and that spent on print media will widen. Spending on print media is predicted to fall when online ad expenditures reach their forecasted height of 28.5 billion dollars in the 2011. Writer’s Market Yearbook 2011, a magazine that closely follows the print publishing industry, reports a continuing trend of print magazines closing up shop due to dips in ad revenue, as ebooks, epublishing and the Internet gain audience attention and market share.
Traditionally, the biggest chunks of ad budgets are spent on expensive ad delivery formats on television. In 2010, the high cost of television advertising accounted for 43.7% of total ad spending. However, experts expect that figure to decline as demand grows for Internet advertising aimed at expanding audiences there. Current figures show more people turn on their computer rather than the television, when it’s time to sit down for a little news and entertainment. 2010‘s average U.S. citizen spent more time surfing the net than television channels with 13.3 hours of weekly webbing compared to television’s 11.3 weekly hours’ viewing time. When asked, more than a third of Internet users report they watch less TV and read fewer newspapers and magazines.
One of the major benefits of Internet versus television advertising comes with the Internet’s inherently broader creative license. Internet advertisers don’t have to follow format restrictions, content regulations or air-time constraints. From these freedoms, businesses and users benefit from more innovative advertising campaigns.
Online spending will far outpace increases in total media spending, which is predicted to inch upward by 1.2% next year after rising 3% in 2010. In 2014, ad analysts predict total media ad spending will hit $188.5 billion, up from $168.5 billion this year.
Folks, it looks like the jury is in and the verdict is ever expanding Internet audiences are what’s keeping the advertising industry afloat in these hard economic times. Internet users propel growth in budgetary spending for online ad campaigns where the heaviest hitters are the increasingly popular technologies of rich media ads.
Paid search’s portion of online ad spending will continue to hover in the 40% range through 2011. Paid search takes the lion’s share of Internet ad spending.
Display ads (like static ad banners, for instance) will comprise about 20% of Internet ad revenue total for the decade.
Classified ads, including those on newspaper sites and in places such as eBay, Monster.com or HotJobs, will average out at about 17%.
Rich media ads, which include video advertising, looks to be the rising star shooting up from 8% market share this year to over 13% in 2011.
Overall, advertisers spent $37.5 billion for online advertising in 2010. Internet ad industry analysts forecast that by the year’s end, 2011 spending for online advertising will reach $42 billion.
Stay tuned for our next post, where we examine detailed statistics and trends for different Internet ad formats.