Online Ad Expenditures to Reach $7.1 Billion by 2002

Driven by big gains in PC penetration and Web usage, Web/online advertising expenditures are predicted to reach $7.1 billion by 2002, according to a new industry study.

The new research report comes from Simba Information in Stamford, CT and is entitled “Web Advertising 1998-99: Market Analysis & Forecast.”

Growth rates will peak in 1999, when Web ad expenditures hit $5.5 billion, a 161.9% increase over $2.1 billion in 1998, according to Simba’s projections.

“The biggest reason Web advertising continues to explode is that the emerging demographics of the Web look more like those of the rest of the world,” said Tim Mullaney, the report’s author. “The Web is attracting a significantly higher percentage of women and middle income users than before, opening opportunities for publishers and advertisers whose products are completely unrelated to computing or the act of surfing the Internet itself.”

Combined Web/online ad expenditures, which also include media spending on services such as America Online, will reach $7.1 billion in 2002, a 238% increase over $2.1 billion in 1998, the report predicts.

“Being able to take advantage of this rapid growth is not assured, however,” Mullaney cautioned. “Web publishers increasingly realize that it is not enough to deliver an audience: instead, the publishers must also hold an audience for long enough to absorb advertisers’ messages before moving on. Web publishers’ ability to allow users to personalize their experience at a given site more completely and participate in a more fully developed community will dictate their ability to attract advertisers to these sites.”

In addition to sizing the Web/online advertising market, the report examines the battle among Web portals for dominance and its impact on Web advertising; the investment climate of the Web advertising industry; the Web’s effect on the media planning process for advertisers; and the kinds of Web advertising that have proven most effective.

The report is for sale; email tom_schmalzl@simbanet.com. Pricing was not disclosed.

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