Universal McCann’s Coen Predicts Surging Internet Ad Growth Throughout 2005

Online advertising expenditures will increase 25.0 percent during 2004, and will continue to grow at the same muscular pace throughout 2005, according to Robert Coen, senior vice president of Universal McCann.

In a year when the presidential election and the Olympics were expected to add an extra kick to advertising sales overall, the 25.0 percent year-over-year growth figure for online spending ($7.1 billion) is significantly higher than McCann had originally forecast for 2004. The group previously projected year-over-year growth of 10.0 percent in the sector this year.

For Internet advertising to sustain that rate into a less event-charged year comes as a strikingly bullish signal for the maturation of the sector, which will continue to outstrip the growth in advertising overall, Coen said.

“The Internet continues to boom and surge, and faster than I had expected,” said Coen. “While I believe it will have to plateau at some point, we are projecting 25 percent growth in 2005 as well.”

The double-digit growth figure is 3.5 times the year-over-year growth rate for advertising overall in 2005, which Coen projects will be 7.4 percent.

Coen delivered his December report at an annual Media and Telecom Week conference put on by Credit Suisse First Boston at the Plaza Hotel in New York City on Monday.

He attributed the better-than-expected growth this year to a number of factors, including the robust numbers put into search advertising; continued growth in the economy; as well as the maturation of the medium overall, led by Yahoo and Google “demonstrating the value of not only hits, but clicks.”

“I’ve been hearing about this since the 90s,” Coen said. “But we project that online advertising spending will continue to expand and evolve, generating even higher percentages of overall ad spending in the next couple of years.” The report comes amid other signs of consistent and stable growth in the sector in 2004, including an AdZone report that estimated online ad sales at $6.25 billion for the first three quarters of 2004.