Web Ad Spend Will Grow 13.4 Percent in ’07, Says TNS

Internet display advertising this year will grow by 13.4 percent over 2006, much faster than an anticipated 2.6 percent growth in the U.S. for all media taken together, according to TNS Media Intelligence’s 2007 ad spend forecast.

If it bears out, that rate of growth will represent a slowdown in spending from last year, when the company measured a 17.9 percent lift during the first nine months of the year.

Forecasts from other firms expect growth for the whole Internet channel, including both display and search, to exceed 28 percent.

TNS predicts the Web will own 7.2 percent of the total ad spend this year, owing partly to media fragmentation.

“The shift to digital media is due to more fragmentation,” said Steven Fredericks, president and CEO of TNS Media Intelligence. “[Advertisers] get more effectiveness out of their ad dollars, [which] can go a longer way. It’s cheaper to advertise on digital than traditional media.”

Media fragmentation allows more brands with smaller media budgets to participate in the market, according to Fredericks. “You start to wonder whether there’s a new phenomenon of efficiency coupled with fragmentation. As traditional moves toward digital, it’s keeping price inflation down. That’s a major factor in why we’re not seeing robust growth as with ad dollars spent in the past.”

While the forecast for the total ad spend predicts only 2.6 percent growth in 2007, Fredericks said it will still reach a record estimated $153.7 billion.

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