Targeted Display and Streaming Video Ads to Grow 60 Percent in 2011

Online ad spending growth is being propped up by targeted display and streaming video advertising, says a new report. According to Borrell Associates, both targeted display ad spending and streaming video ad spending will grow by around 60 percent in 2011. In turn, spending on less-targeted ads such as run-of-site display and national paid search is poised to fall.

"There really is unparalleled ability in the past year, year-and-a-half, to be able to deliver ads targeted to that one person as opposed to whom you think might be visiting a site," said Gordon Borrell, CEO of the local media and advertising research firm, referring to the increased usage of behavioral and other forms of targeting. "That's peeling off a lot of the growth from [run-of-site] banner ads," he continued.

According to Borrell, targeted display advertising will hit $10.9 billion in total in 2011. Local targeted advertising will reach $2.3 billion, while national is expected to hit $8.6 billion, the company reported. And, while national targeted advertising will grow almost 50 percent, local targeted ads will grow at an even higher rate.

"They're not buying mass anymore; they're buying niche," said Borrell.

Streaming video advertising spending is also expected to jump by over 60 percent next year, to reach $5.6 billion. Although Borrell recognized that larger brand advertisers are creating some of that revenue increase, he said small and medium sized businesses using services provided by yellow pages and other local advertising companies are the true drivers.

"It's driven more by the small and medium businesses because it's a new market," he said.

According to the report, two of every five dollars spent on streaming video ads will come from local advertisers next year. Local streaming video ads will generate $2.2 billion in 2011, the report shows.

Meanwhile, ROS and national paid search advertising is on the decline. Borrell expects total ROS ad spending to fall 14 percent overall in 2011, though local ROS will fall around 3 percent. National paid search will drop around 11 percent.

Local online ads will generate around $16 billion in 2011, growing nearly 18 percent. In all, the report shows online ad spending will increase 14 percent, reaching almost $52 billion. However, according to Borrell, mobile advertising is helping lift those numbers. "If mobile didn’t exist, online advertising would go flat," he suggested. "As smartphone ownership now comprises 25% of all cellphone ownership, mobile ad sales will enjoy growth of more than 20 cents of every online ad dollar spent next year," the report states.