IDC Finds Internet Advertising Keeps Growing Fast Despite Economic Difficulties
FRAMINGHAM, MA – May 30, 2008 – Internet advertising in the United States will continue to grow fast even as the current economic woes will lead to a contraction in ad spending overall, essentially accelerating the transfer of marketing budgets from the traditional media into the new. During the forecast period, Internet advertising will grow about eight times as fast as advertising at large. IDC finds overall Internet advertising revenue will double from $25.5 billion in 2007 to $51.1 billion in 2012.
The Internet will go from the number 5 medium all the way to the number 2 medium in just 5 years, making it bigger than newspapers, bigger than cable TV, bigger even than broadcast TV, and second only to direct marketing. Video advertising will be the principal disruptor of Internet advertising over the next five years by attracting the most new marketing dollars. Its revenue will grow sevenfold from $0.5 billion in 2007 to $3.8 billion in 2012 at a compound annual growth rate (CAGR) of 49.4%. This growth will take place because brand advertisers will shift significant amounts of money into these video commercials, primarily from broadcast television and to a lesser extent from cable television.
"The size of the online video audience as well as the time it spends watching video is sure to increase as broadband access penetration increases, connections become faster, and as more premium content is available," said Karsten Weide, program director, Digital Media and Entertainment. "What will also drive this trend is that consumers are starting to realize that, as opposed to TV, Internet video lets them watch what they want, when they want, and increasingly also where they want."
Search advertising will remain the one advertising format that will garner the most revenue over the forecast period in the United States. This means that for any media company, search must be a key part of its strategy. Any media company that is not Google cannot ignore this segment even if Google is towering above all others as segment leader with about 70% share of the segment's revenue.
IDC's recently released study, U.S. Internet Advertising 2008-2012 Forecast and Analysis: Defying Economic Crisis (IDC #212149), forecasts expenditures on Internet advertising in the United States for 2008–2012. It predicts the overall volume of spending on Internet advertising; breaks out spending by advertising format, including mobile advertising; and also provides ad spend on social networking services (SNS). Top-line numbers for all major traditional media are also included.
IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 100 countries worldwide. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.
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