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James Perrin

Online Ad Spend in the US Predicted to Soar

8th Jun 2011 News, Industry News 2 minutes to read

As businesses and marketers continue to invest in digital advertising, the sector is seeing huge growth, in fact 20% growth in 2011 according to eMarketer.

Specifically, the figures are reflective of US online advertising spend which is expected to reach $31.3 billion over the course of this year. Comparing this figure to the $26.0 billion spent last year, that’s an impressive 20.2% year on year increase. What’s more, this growth is expected to continue over the next 4 years with nearly $50 billion predicted to be spent on online advertising in 2015.

As technologies continue to improve and broadband speeds quicken, we are seeing more traffic on the web. For example, the explosion of smartphones and tablets has helped more people get online. This triggers online businesses to take advantage of emerging platforms such as social media and advertising formats such as videos.

The rate of growth however looks like it will slow down and online ad spend may even plateau at some point in the future. For example eMarketer have shown that whilst the year on year ad spend growth between 2010 and 2011 is at 20.2%, this could decline each year, resulting a year on year growth between 2014 and 2015 at 8.8%, quite a significant drop.

What this is suggesting is that at present, there is plenty more room for growth as more people are being encouraged to get online, with many new online businesses emerging to advertise online.

This news comes after the Internet Advertising Bureau (IAB) and accountants at PricewaterhouseCoopers (PwC) conducted research into the UK advertising market. They announced that last year the market topped the £4 billion mark, growing year on year by 12.8% to 2010 [See: Online Advertising Spend Exceeds £4 billion] and the breakdown of online digital spend is remarkably similar.

For example, banners, search, classifieds and directories are predicted to show strong increases and eMarketer principle analyst, David Hallerman explains that, “The rise of Facebook has been another prime factor in display ad growth.”

When comparing this to the findings from the IAB and PwC we can see that one of the biggest growth areas last year was indeed display advertising spend on social network sites, which in the UK markets, accounts for 23% of total online advertising spend.

However, just like with eMarketers findings, it is the advertising spend on search engines that dwarfs all other online advertising channels. In the UK this accounts for 57% of total online spend (as of 2010) and in the US this is predicted to reach 45.9% by the end of 2011. So whilst growth may eventually slow, overall market dominance is likely to be strengthened.

The biggest area of growth will come from online videos, in which ad spend is predicted to growth by more than 52% this year alone. Hallerman explains that, “Combined with greater targeting and measurement than marketers get with TV ads, the growing consumption of online video has done more to attract brands than any other online ad format.”

Will the UK’s ad spend on online videos grow as much as the US markets? Well, as shown the UK market parallels that of the recent findings from the US market; the breakdown of which makes interesting reading and tells us that this may be the case.

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