Dot-Coms Surge to Lead Display Ad Growth

  |  June 1, 2006   |  Comments

Internet companies account for just over half of display advertising, the largest share since 2001. Blue chip advertisers followed with 25 to 30 percent, according to TNS Media Intelligence.

Internet display advertising experienced a 19.4 percent growth in the first quarter this year with revenues of $2.31 billion. The increase helps bolster an otherwise disappointing 5.2 percent increase on total advertising reported by TNS Media Intelligence.

An earlier forecast for 2006 placed growth for the Internet at 9.1 percent, about half of the first-quarter's gain of 19.4 percent. The 5.2 percent growth experienced across all advertising is just short of the 5.5 percent increase expected for the full year.

The largest online media buyers were Internet companies, which represent 50.1 percent of spending in the category, marking a post-bubble resurgence, according to TNS SVP of Research Jon Swallen.

"In the first quarter of this year online brands accounted for just over 50 percent of activity, and that's the highest percent of dot-com activity since the bust in 2001," Swallen told ClickZ.

Blue chip advertisers were next largest, representing between 25 to 30 percent of total display advertising. "When you look at blue chip advertisers, they continue to shift budgets to the Web, and they now represent collectively as a group about one-third of display [advertising]," said Swallen. "It's still not as big a segment as the dot-com brands, but they do continue to grow in their importance and contribution to Internet revenues."

Representation from the automotive sector pales in comparison to dot-com and blue chip companies, and the troubled manufacturers continued to reduce spending for the third consecutive quarter. Advertising for domestic automotive decreased by 11 percent, and foreign auto advertising reduced its expenditures by 2.6 percent. There is some evidence that the sector is moving more dollars online even as budgets are cut, said Swallen.

"For the factories, their allocation of budget to the Internet has been growing in recent years, but it is still quite modest and lags the overall market by a few percentage points," he said.

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