Kelsey: U.S. Interactive Ad Revenues to Hit $62.4 Billion by 2012

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Interactive advertising in the U.S. will grow from $22.5 billion in revenues in 2007 to $62.4 billion by 2012, according to "The Kelsey Group's Annual Forecast (2007-2012): Outlook for Directional and Interactive Advertising," released today.

Kelsey analysts expect the U.S. market to see 22.6 percent compound annual growth rate for interactive advertising, including search, local search, display advertising, online classifieds and other interactive ad products.

The report also predicts global interactive ad revenues will reach $147 billion U.S. by 2012, up from $45 billion U.S. in 2007, rising at a compound annual growth rate of 23.4 percent. Interactive advertising grew in the global market from 6.1 percent in 2006 to 7.4 percent in 2007. Kelsey analysts predict interactive's share of global ad spending will grow by 23 percent and eventually reach 21 percent of the total ad spend by 2012. The report states that the overall worldwide advertising market grew to over $600 billion U.S. in 2007, and is expected to continue growing to $707 billion in five years.

Matt Booth, SVP interactive local media for Kelsey, also predicted a boom in the number of companies that will try to take advantage of the increase of interactive marketing's percentage of the global advertising budget.

"Growing from 7.1 percent to 21 percent is a lot. We're saying that there will be a big shift to digital advertising markets," he said. "The global shift to digital products will be the most interesting and we'll see what kind of global company start-ups will go after that acceleration of dollars moving to digital products."

The growth of online advertising will come at the expense of print and newspaper advertising, which has been an ongoing trend, according to Booth.

"Globally the print newspaper business will decline... 5.8 percent per year across the board. Most of the growth in digital is going to come from print decline," said Booth. "[Particularly] Yellow Pages print declines, which are smaller, and newspapers which make the largest share drop in our forecast."