Press Release: Internet Advertising Alive & Well

By | June 5, 2008

Dollar SignAccording to a press release from IDC published on May 30, 2008, Internet advertising will not suffer from the current budget woes. While overall ad spending will decrease, Internet advertising will increase at a rate of about eight times that of the advertising industry at large, signaling a transfer of marketing and advertising power from other media outlets.

IDC Finds Internet Advertising Keeps Growing Fast Despite Economic Difficulties

30 May 2008

FRAMINGHAM, Mass., May 30, 2008 – Internet advertising in the United States will continue to grow fast even as the current economic woes will lead to a contraction in ad spending overall, essentially accelerating the transfer of marketing budgets from the traditional media into the new. During the forecast period, Internet advertising will grow about eight times as fast as advertising at large. IDC finds overall Internet advertising revenue will double from $25.5 billion in 2007 to $51.1 billion in 2012.

The Internet will go from the number 5 medium all the way to the number 2 medium in just 5 years, making it bigger than newspapers, bigger than cable TV, bigger even than broadcast TV, and second only to direct marketing. Video advertising will be the principal disruptor of Internet advertising over the next five years by attracting the most new marketing dollars. Its revenue will grow sevenfold from $0.5 billion in 2007 to $3.8 billion in 2012 at a compound annual growth rate (CAGR) of 49.4%. This growth will take place because brand advertisers will shift significant amounts of money into these video commercials, primarily from broadcast television and to a lesser extent from cable television.

“The size of the online video audience as well as the time it spends watching video is sure to increase as broadband access penetration increases, connections become faster, and as more premium content is available,” said Karsten Weide, program director, Digital Media and Entertainment. “What will also drive this trend is that consumers are starting to realize that, as opposed to TV, Internet video lets them watch what they want, when they want, and increasingly also where they want.”

Search advertising will remain the one advertising format that will garner the most revenue over the forecast period in the United States. This means that for any media company, search must be a key part of its strategy. Any media company that is not Google cannot ignore this segment even if Google is towering above all others as segment leader with about 70% share of the segment’s revenue.

IDC’s recently released study, U.S. Internet Advertising 2008-2012 Forecast and Analysis: Defying Economic Crisis (IDC #212149), forecasts expenditures on Internet advertising in the United States for 2008–2012. It predicts the overall volume of spending on Internet advertising; breaks out spending by advertising format, including mobile advertising; and also provides ad spend on social networking services (SNS). Top-line numbers for all major traditional media are also included.

For more information, contact:

Karsten Weide

Michael Shirer