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Online Ad Spending Outrunning Offline

By: David Utter

The New Year should show a trend in spending for online advertising that will have those dollars exceed those expended on offline ads at seven times the offline pace.

Court Hammers Realtors In DOJ CaseMaybe 2007 should be called The Year The Internet Killed Madison Avenue. Perhaps not just yet, but if 2007 isn't the year the crime is committed, it could be when the murderer plots and plans while Hercule Poirot enjoys a cup of coffee elsewhere on the train.

Global Internet advertising spends have been forecast to increase at a 28.2 percent rate for the year. Offline dollars should rise too, but at a rate of 3.9 percent.

'Disparity' doesn't begin to describe the separation between the two worlds. The ZenithOptimedia report appearing at eMarketer. Inside the USA, they noted, online ad spends will increase by almost 19 percent in 2007.

The entire ad industry has been projected to increase at 1.4 percent in the next year.

Out of the spending that takes place around the world, the slice of ad dollars consumed by the Googles of the Internet will take seven percent of them in 2007. By 2009, Internet advertising should draw 8.6 percent of that money.

And it's big money too. ZenithOptimedia predicts $446 billion globally in 2007. Out of that figure, $31.3 billion heads to the Internet. The firm described the growth rate and percentages for some of the global markets:

"We expect the Internet to take nearly 9% of global adspend by 2009, but experience from the most developed markets suggests it is heading for well over 10%. The Internet already attracts more than 10% of adspend in three markets (Norway, Sweden and the UK), and by 2009 we expect it to do so in ten markets (Australia, Canada, Israel, Japan, Norway, South Korea, Sweden, Taiwan, the UK and USA). The Internet has its highest share in the UK, where it will attract 13.5% of adspend this year and 21.5% in 2009."

Television still dominates global ad spending, followed by newspapers, magazines, and radio. Internet advertising looks poised to surpass radio in two years, just as it has outdoor and cinema advertising. This year, Google looks like it will keep 25 percent of Internet ad revenue to itself. The challenge for them will be to maintain or increase that share in the face of rising competition.


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