Report: B2B Web’s Fastest Growing Ad Segment

A new study concludes that B2B online ad spending is increasing faster than the industry average, and if growth rates continue, will reach $3 billion by 2005.

The business-to-business sector is the fastest growing segment of Internet advertising, growing from one billion impressions in third quarter 1999 to 5.6 billion in second quarter 2000, according to a report released jointly Thursday by e-commerce analysts Jupiter Communications and online audience measurement and metrics firm Media Metrix .

In June, the two firms announced their intention to merge their practices and service offerings. The joint report is the first from Jupiter and Media Metrix to cover the B2B industry.

If growth trends continue, the entire B2B online ad segment could hit $3 billion by 2005, the study shows. Total ad spending in that case will reach $16.5 billion worldwide, up from $4.3 billion in 1999.

The report also indicates that B2B online advertising impressions grew 94 percent during first quarter 2000, up from 89 percent during the previous quarter — as compared to industry-wide growth of 92 percent for the period.

Advertising CPM rates are generally higher on B2B Web sites, because advertisers are willing to pay more to reach the highly-targeted audiences available on such sites, and because expenditures by businesses are usually much bigger than those by consumers.

“Due to its relative immaturity and smaller current base of ad impressions, we believe that the B2B market will maintain a faster growth rate in online advertising impressions than the overall industry for the next three years,” said Jupiter forecasting director Vipul Patel.

The study’s authors suggest that at the current rate of growth, B2B will nearly double its impressions by 2001.

The report attributes this growth to B2B companies’ increasing willingness to commit greater portions of their ad budgets to online advertising as they realize its advantages in measurement and targeting over traditional media.

However, even though B2B companies’ average monthly online ad expenditures are expected to increase, the study suggests that the segment’s spending will remain significantly less than that of business-to-consumer advertisers, which in general enjoy larger total advertising budgets.

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