Online ad spending would surge 22 percent, to $15.5 billion. While that is still less than 2 percent of overall global ad spending, there are signs that online advertising has come of age.
As advertising industry gurus fine-tune their spending forecasts for 2005, there is one area in which a sense of caution bred by several years of disappointment doesn’t apply: online ads.
Carat, a media-buying specialist owned by London-based Aegis Group, predicted last week that global ad spending would expand this year by 4.9 percent - a modest increase, given that outlays rose 6 percent in 2004.
But the firm added that online ad spending would surge 22 percent, to $15.5 billion. While that is still less than 2 percent of overall global ad spending, there are signs that online advertising has come of age.
Mainstream marketers like Coca-Cola, Procter & Gamble, BMW and Volvo, concerned that consumers are immune to sales pitches made via traditional media like television and print, are turning to the Internet, where advertising used to be dominated by, well, other Internet companies. The spread of broadband technology has fueled online commerce and content and allowed ad agencies to develop more creative, engaging ads.
Perhaps most important for the global growth of Internet advertising, spending is increasing most rapidly in Europe and Asia; Carat says it rose 31 percent in Europe last year and 42 percent in Asia, compared with 10 percent in the United States. Until recently, there was relatively little online advertising outside the United States and a few other markets.
Surveys show that in many developed countries, more than 10 percent of media consumption, measured in terms of time, is online. While the share of advertising spending may never reflect that proportion of time consumption, it could soon rival those of radio and outdoor advertising, analysts say.
Online ads offer some advantages over traditional media, including the ability to aim pitches directly at the consumers most likely to respond and then to track their actions. That helps solve one of the biggest complaints about television advertising: that much of the spending is wasted, particularly as consumers turn to so-called personal video recorders that let them skip ads entirely.
But the growth of Internet advertising is also spawning a reaction as users seek ways to avoid online spots. The Mozilla Firefox Web browser, which is gaining users, includes a feature that blocks annoying pop-up ads, and the Google toolbar, a free ad-on to Microsoft’s Internet Explorer, also blocks pop-ups.