Magna: 2009 to Be Only Down Year for Online Ads

  |  October 14, 2009   |  Comments

Next five years will bring strong growth in online and mobile spending, IPG agency predicts.

Spending on Internet and mobile advertising will decline about 3 percent this year compared to 2008 levels but will see strong growth for the next five years, according to a forecast from Interpublic Group's Magna media services firm.

Brian Wieser, director of forecasting for Magna, said about $22.8 billion will have been spent on all forms of online and mobile advertising by the end of the year. Although that represents a decrease from last year, the future looks significantly brighter as Wieser is predicting a 7.7 percent increase in 2010, to $24.6 billion. By the end of 2014, online and mobile advertising expenditures should hit nearly $35 billion, representing a compounded annual growth rate of 8.9 percent, according to Wieser.

In its latest forecast, Magna said advertising expenditures of all types to media suppliers will be about 9 percent less during the fourth quarter of this year than they were during the fourth quarter of 2008. "Industry revenues will fall from $47.5 billion in the fourth quarter of 2008 to $43.2 billion during the fourth quarter of 2009," said the report. But the figures "reflect a moderating pace of decline" when compared to the estimated revenue declines of 13 percent during the third quarter and 18 percent during both the first and second quarter of this year, the report said.

Amid the declines, paid search and online video actually grew in the first half of the year, according to the report. Those channels will continue to be the fastest-growing segments of media advertising for the rest of the year. "Search advertising caused an expansion of the market, making it possible for millions of small- and medium-sized enterprises to do what we call advertising," Wieser said.

He said online Yellow Pages ads performed "relatively well" during the year -- not as well as Magna predicted "but still in growth mode."

The report said direct online advertising, which saw $13.5 billion in revenue last year, grew 2.5 percent this year to $13.8 billion and will blossom to $15.4 billion next year. Local digital advertising revenue for 2009 will come in at about $3.4 billion, a decrease of about 11 percent from 2008, and will increase to about $3.5 billion in 2010, said the forecast. It predicted national digital ad revenue for 2009 will come in at about 5.5 billion, about 9.8 percent less than in 2008 and will grow slightly next year to about $5.6 billion.

Although Wieser said conventional display advertising "is at risk," he predicts it will continue to grow in popularity because it will become less expensive. "Increasingly, it's possible to buy display cheaper and cheaper," he said.

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