An ePublication from Ecommerce Partners

Online Advertising is Growing Globally

By | October 9, 2006 12:43 pm

If you want to assess the health of any commercial media mode, then it’s obviously wise to start with that most handy yardstick – advertising revenue. Worldwide, the current growth in advertisers’ spending on the internet, rather than any other mode, continues to speak of the web’s capacity for altering the known universe.

The online marketing consultants Zenith Optimedia produce quarterly tracking studies of advertising spending on a global scale. Their latest survey indicates that the market share of advertising spending that goes to internet sites will, in the next year, break the double-digit barrier in at least two countries – the UK (at 12.9%) and Sweden (at 10.5%).

By 2008 some other leading national markets that will break the double-digit barrier in online ad spending, according to the study, include Australia, Israel, Japan, Norway, South Korea and Taiwan.

The global picture of rapid increase is clear. The report says:

“The internet’s share of global ad expenditure was 4.7 percent in 2005. We predict it will be 5.7 percent in 2006 and 7.3 percent in 2008. At this rate the internet’s ad share should reach double-digits worldwide by 2011.”

Interestingly, Zenith Optimedia say that it’s smaller advertisers that account for much of the growth. They are “embracing the affordability and targeting capabilities” of online advertising.

It turns out that big companies are among the ones who are slowest to change.

“Advertisers in the top ten categories have been cautious about moving into Internet advertising,”

according to the survey. It finds that between 2001 and 2005 the proportion of the biggest firms’ budgets allocated to the Internet increased from 2.2 percent to 3.2 percent. This was at a time when the Internet’s share of total ad expenditure rose from 2.5 percent to 4.7 percent.

“This of course means that advertisers from smaller categories have been spending more than average on internet advertising, which is relatively cheap and can be targeted very effectively,” the agency notes. “This makes it suitable for smaller advertisers, for some of which mass-media campaigns would be too expensive and have too much wastage. The Internet therefore encourages these advertisers to spend more than they would otherwise have done, and is not just cannibalizing ad expenditure that would have gone elsewhere.”

In terms of overall media, the agency now expects global ad spending will grow 6.0 percent this year, 5.4 percent next year and 5.9 percent in 2008. The U.S. is poised to expand at even more moderate rates: 5.2 percent this year; 4.2 percent in 2007; and 4.3 percent in 2008.

In relative terms toward other media, it all means that the internet – already poised to overtake the ad revenue share of outdoor (billboard) advertising worldwide – will soon be outranking radio.

That just leaves newspapers, magazines, and television to beat.

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Founded in 1998, ECommerce Partners is a full-service, ecommerce and interactive agency headquartered in New York City. Best known for our unique process methodology, we combine Internet expertise, creative talent, and business know-how to help clients across a variety of industries achieve rapid, measurable online marketing results.

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