While advertising dollars spent in cyberspace is on the rise, the overall slice of the pie is smaller than what many may suspect. In fact, one source says Internet advertising is a decade of steady growth away from overtaking newspapers. For the optimistic advertiser, this means there’s lots of room to grow.
The Interactive Advertising Bureau and Pricewaterhouse Coopers reported that Internet advertising revenue in the first half of 2005 is outpacing the first half of 2004 by 26 percent. This growth is a repeat of the previous year when 2004 upped 2003 by 29 percent.
But a Banc of America Securities study of the 100 leading US advertisers (those whose advertising budget exceed $1 billion) found that Internet advertising spending composed of only 5.3 percent of these companies’ total budget.
Newspapers, on the other hand, won 21 percent of big advertiser love. Additionally, Internet ad spending was dominated by three categories, telecommunications, retail, and entertainment, only three of the seven top categories.
As quoted by Editor & Publisher, “Internet advertising would have to grow 15% to 20% year over year the next 10 years to reach the ad dollars spent on newspapers, or approximately $35 billion.” The current total is $7.4 billion.
But one has to ask if that projection (15-20 percent for 10 years) is doable. Judging alone from Google’s success in the Internet advertising, and adding the speculation of what Google plans to do with all that wireless power, one might say yes. But other factors suggest the trend will continue as well.
Mike at Tech Dirt was smart to point out two other trends that may be indicative of the direction advertising dollars will take. Newspapers, though reaching an ever-plentiful Baby Boomer demographic, are much less likely to reach the more attractive young male demographic than the Internet.
Mike is astute enough to also note that this coveted demographic is reported to be abandoning movie theaters, in favor of home theaters and a more controllable Internet experience.
Others have consistently reported that this group, with its higher disposable income and unsettled spending habits, are increasingly likely to have a strong web presence.
While some fear a second dot-com bubble, the savvy advertiser will understand this to be an opportunity to improve his client’s ability to target any demographic online with contextual search marketing and the like, producing a much higher return on investment.
This small pie slice can mean one thing-there’s a larger slice to be had.
