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Industry Overview

Essay by review  •  January 14, 2011  •  Essay  •  346 Words (2 Pages)  •  981 Views

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Recent Performance

The online advertising industry has experienced extremely strong growth in recent years. The Interactive Advertising Bureau and PricewaterhouseCoopers reported that internet advertising spending increased 34.4% from $12.5 billion in 2005 to $16.8 billion in 2006 . In addition, according to the Nielson Monitor Plus, the leading provider of competitive advertising information, spending on internet advertising increased 15.9% in the first three quarters of 2007 compared to the same period in 2006. In a period in which overall advertising spending decreased by 0.1%, growth in internet advertising led all other advertising categories, including National Magazines (7.7%), National Sunday Supplements (6.0%), Outdoor (5.7%) and National Cable TV (1.2%).

Future Outlook

Internet advertising is expected to continue growing strongly in the next three years. Major research companies Forrester Research, JupiterResearch, Oppenheimer, PricewaterhouseCoopers and Borrell Associates project internet advertising spending to reach $22 billion by 2011 in conservative scenarios and $36 billion in optimistic scenarios. Research company eMarketer predicts that internet advertising will increase to $42 billion by 2011. In addition, by 2010, US online advertising will double as a percentage of total media, rising from 6% in 2006 to more than 12% in 2010 .

eMarketer bases its optimistic outlook for the internet advertising industry on the fact that the industry met four key milestones over the course of 2007. Firstly, US internet advertising recorded its largest quarter ever in the history of the industry when it surpassed $5 billion in sales in Q2 of 2007. Secondly, the budget share invested in the four traditional media advertising outlets вЂ" television, newspapers, radio, and magazines вЂ" by 69 of the top 100 advertisers declined in 2006 as compared to 2005. However, in the same period, 70 of the top 100 advertisers increased the budget share invested in internet advertising. Thirdly, according to eMarketer Senior Analyst David Hallerman, internet advertising appears to be more resilient to economic turmoil. Fourthly, total internet advertising spending is expected to exceed radio advertising spending in 2007, the first time in history internet advertising spending will have been greater than any of the four traditional advertising

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