Web a Bright Spot as TNS Revises U.S. Ad Forecast Downward

  |  June 13, 2007   |  Comments

Online ad spending will lead overall ad spending with a 16 percent growth rate in 2007, according to an updated forecast.

Online ad spending will lead overall ad spending with a 16 percent growth rate in 2007, according to updated forecast figures issued by TNS Media Intelligence. TNS downgraded an earlier estimate of growth in overall U.S. ad expenditures for the year by almost a full percentage point . It now anticipates a mere 1.7 percent growth rate to $152.3 billion.

The marketing information provider estimates spending on Web display ads would grow far faster than that in any other category. The Web's closest contenders in terms of growth will be cable network TV and outdoor ads, which it anticipates will grow 5.9 percent and 4.6 percent for the year, respectively.

TNS reported earlier this month that online ad spending was up 16.7 percent over Q1 2006.

"Internet display advertising is continuing on the track that it's laid out over the last two years," said TNS SVP of Research Jon Swallen. He said online offers advantages over traditional offline media such as better targeting, lower out-of-pocket costs, and more options for small-budget advertisers.

"The continued ability to demonstrate ROI and retain accountability is attractive for advertisers, and will continue to drive budgets onto the Internet," Swallen said.

Economics, according to Swallen, is a factor in the budget cuts affecting the overall ad spend. "By and large it's a slowdown of overall economic growth, and the first quarter was certainly evidence of that," he said, though TNS stipulates the second half of the year is likely to see a return of confidence. He warns, however, that any reversal of ad budget cuts "will not make up for the lost ground we've encountered."

While the Internet spend will increase at a rate faster than all other media channels, a recent report released by JupiterResearch finds the Internet ad spend lags other media, despite increasing time spent online.

Additionally, a Q1 ad spend report released by Nielsen Monitor-Plus reported a 0.6 percent decline in U.S. ad spending across all media. Internet spending increased 31.9 percent in Q1 2007 over the first quarter last year, Nielsen Monitor-Plus found. The online category includes CPM-based image-base advertising reported by Nielsen//NetRatings.

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Enid Burns

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