Net to account for 15 per cent of ad spend in 2010

MUMBAI: Internet advertising is expected to account for about 15 per cent of global measured ad spending in 2010, up from an anticipated 13 per cent in 2009, according to a new GroupM study.

The figure represents an estimated $64.7 billion globally, an 11 per cent increase over the previous year’s total.


The hike is being sparked by ad spending increases in both search and mobile and a continuing ad spending decline in traditional media, according to the report titled Interaction. It also said internet ad spending has outperformed all other media throughout the recession of the past year and into the current recovery.

In the US, digital advertising is expected to grab 17 per cent of total spending in 2010 compared to 15.4 per cent in 2009 and 13.9 per cent in 2008, according to the report. The 2010 figure represents an estimated $24.4 billion in digital advertising, a 7 per cent increase over the previous year.

Most of the US growth is driven by search and video, which compensates for declines in Internet display advertising and sponsorships. Again, the report indicated that most of the US growth will be fueled by sharp declines in traditional print advertising, particularly newspapers.

GroupM Interaction CEO Rob Norman says, "For several years the focus has been on the rapid rise of Google and the implications of its auction based pricing to advertisers and agencies. Today, search remains a key driver of digital marketing as advertisers compete to capture a disproportionate share of the intention that search behavior represents.

"Now, however, the importance of influencing the organic listings has increased significantly, as has the focus on creating and capturing intent expressed in social media and micro-blogging actions. Search marketing is becoming intention marketing and is moving beyond results pages to activating and responding to the social graph."

However, while spending on search and mobile were on the rise, the growth in Internet display advertising has lost impetus over the past several years as supply has run ahead of demand. In 2010 display spending is expected to hold a 34 per cent share, down from 35 per cent in 2009, 37 per cent in 2008, 38 per cent in 2007 and 39 per cent in 2006. Search, meanwhile, has grown from a 38 per cent share in 2006 to an anticipated 43 per cent in 2010.

In terms of spending, the report predicted an even greater disparity with global display ad spending predicted to grow 5 per cent to an estimated $20 billion in 2010 while search is expected to show a 12 per cent increase representing $25 billion in spending.

Mobile advertising’s 2010 share of global ad spending is predicted to reach six per cent of the total, accounting for a 19 per cent increase to $3.3 billion from $2.8 billion in 2009. In 2008, GroupM estimates mobile ad spending was at $2.4 billion.

In addition to spending forecasts, the comprehensive report also details ad investment in paid search, Internet display, mobile and e-mail, and indicates media cost inflation/deflation.

The survey covered 36 countries and shows digital advertising’s share of total ad investment rising from 3.1 per cent in 2001 to 14.6 per cent in 2010. It points out that Internet advertising has been the principal source of media investment growth in western nations since 2001 as spending in traditional media has leveled off and lately retreated.

Key Findings: As the inexorable switch to digital continues, major newspapers and magazines will continue to suffer audience and, as a result, advertising declines. Consumers have little appetite for paying for news and entertainment content that is available free elsewhere.

Video has taken over from social media as the new digital darling. As owners of professional quality video content allow more video to be broadcast online, consumers are responding enthusiastically.

Display is increasingly dominated by ad networks and others whose mission is to drive measurable return on investment. Social media continues its extraordinary growth in consumer adoption and interaction, but still little revenue in proportion to the total time spent or impressions available.

In the US, the number of people accessing news on their mobile devices daily has more than doubled to 22 million and those accessing a social networking site have increased fourfold to nine million compared to just a year ago. (Source: ComScore, March 2009). This is a generally desirable target audience for marketers. If one uses consumer behaviour as a gauge of a medium’s potential, there appears to be good news in mobile’s future.

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