By Aisling M. Brennan
Account Director
The latest Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) report detailing the substantial upsurge in online advertising revenues in the US reinforces the claim that global ad spending is on the rise and predicted to top $400 billion in 2005*.
In the US alone, online advertising revenues climbed to a record-setting $3.1 billion in Q305--33.9% increase over last year's $2.3 billion, according to the IAB/PwC report. As a result the IAB is projecting that US ad revenues will surpass $12 billion for the year-an increase of more than 25% from 2004's $9.6 billion.
This forecast appears to be consistent with other reports showing continued strength in online advertising. At Yahoo! third-quarter marketing revenue grew 46% to $1.16 billion. Ad revenues at America Online increased to $324 million in the third quarter, representing a 28% leap from last year. And Google experienced a third-quarter revenue surge to $1.578 billion--a 96% jump from the third quarter of 2004.
In the UK the trend continues with online advertising spend expected to surpass 1 billion pounds this year after recording a massive 62% growth in the first half of 2005. According to the IAB in the UK, having topped radio spending last year, UK online ad spend is overtaking the outdoor sector as well. This is phenomenal growth.
In Canada online advertising revenues are also predicted to surpass estimates and rise 43% to CAD$519m in 2005. Ireland is also experiencing similar patterns with recent estimates placing Irish online advertising spend on par with cinema advertising in 2005.
So, What's Driving the Massive Increases in Global Online Ad Spend?
Well a combination of increased broadband penetration into households throughout the globe, increasingly creative advertising and increased demand for Internet consumption all play a role in this.
Broadband Penetration
Increased broadband penetration is one of the leading contributing factors of these record breaking figures. In the US high-speed Internet connectivity is now estimated to be in 50% of homes connected to the Web. In the UK this figure jumps to 75%**.
In addition competitive broadband pricing and increased connectivity speeds have fed the increasing demand for Internet consumption.
Engaging creativity
Innovation in technology and increased connectivity speeds have facilitated more creative opportunities for advertisers, away from standard animated banners and buttons. Streaming video, personalisation, interactive formats, and localisation have all increased the appeal of the media to both advertiser and consumer alike.
Media Consumption
As media consumption continues to fragment from traditional channels like television, marketers are continually striving to attract and appeal to their target audience. And the Internet advertising is the natural next step for them.
* Source: ZenithOptimedia, October 2005
** Source: Nielsen/NetRatings, October 2005
