Online Advertising Expenditure Forecast, 2009-2010

  |  May 8, 2009   |  Comments

Forecast: A look at projected online ad expenditures for 2009 and 2010.

Interactive ad expenditures will continue to climb incrementally this year and through 2010 in all but one media type. That's according to a Jack Myers Media Business Report forecast released by Jack Myers Publishing.

Online advertising, which includes display, search, video, and other categories, is expected to tally $25.4 billion in spending this year and $26.1 billion in 2010. If those forecast figures are reached, they will account for 2.9 percent year-over-year growth in 2009 and 2.7 percent growth in 2010.

Display advertising spending is expected to drop in 2009 and 2010. In 2008, the channel brought in $11.4 billion. However, spending is expected to be $11.2 billion in 2009 and $10.8 billion in 2010, a 2 percent and 3 percent drop, respectively.

"It's mostly a downward CPM pressure and CPC pressure," said Jack Myers, media economist at Jack Myers Media Business Research. "We're in the supply-and-demand business, and supply has increased exponentially. Vertical ad sales networks have driven price to cheap impressions, while demand has increased for display advertising overall."

Search will see as much as 7 percent growth in 2009 and 6 percent in 2010, according to the forecast. The media type is expected to climb from $12.2 billion last year to $13 billion by year end.

Newer media types will show the highest gain, though they will build from a smaller base. A grouping including video, social networks, widgets, and other media is expected to grow from $1.2 billion to $1.4 billion between this year and next, a 20 percent increase.

"It reflects the growth for the industry," said Myers. He said most of the money will go to video. A recent forecast from IPG's Magna estimates $699 million will be spent on video advertising this year.

Social remains a developing category for advertisers. "They just don't know how. There's a debate whether they should do widgets, tie into companies like Social Vibe, and cause-related [campaigns]," said Myers. "How is Facebook going to change...There is confusion."

Mobile and in-game advertising are two additional channels where growth will come from a smaller base. Estimates in both categories are more conservative than projections from 18 to 20 months ago. "I think [mobile is] going to be a strong growth segment but probably won't really take off until 2010," Myers said.

In-game advertising is expected to see 9 percent growth in 2009 and 28 percent growth in 2010. "While marketers like it, it's a lot of work, a lot of involvement," Myers added. "It's engagement, it's growing."

Across all advertising and marketing, the forecast states a 6.6 percent drop in 2009 to $702.2 billion and 5.2 percent year-over-year drop in 2010 to $665.7 billion.

"Interactive is clearly outperforming traditional media and will continue into the foreseeable future. But we can't underestimate the ability of the traditional media companies to use their brand strength to capture their growing strength of the interactive budgets," Myers said.

The forecast references reports issued by Veronis Suhler Stevenson Communications Industry Forecast, Zenith Optimedia, GroupM, Magna Global, Zenith Media, PQ Media Alternative Media Research Series, Wachovia, Barclays Capital, Goldman Sachs, Credit Suisse, Winterberry Group, Morgan Stanley and other research reports.

Online Advertising Expenditures by Channel
2009 Forecast 2010 Forecast
Channel Growth (%) Spend (000) Growth (%) Spend (000)
Online (includes display, search, video, and other) 2.9 25,396 2.7 26,081
Online display advertising -2.0 11,184 -3.0 10,849
Online search advertising 7.0 13,012 6.0 13,793
Online video, social networks, widgets, other 8.6 1,200 20.0 1,440
Videogame advertising 12.0 908 12.0 1,017
Mobile advertising 9.0 714 28.0 914
Source: Jack Myers Media Business Report, 2009

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