The first half of 2005 has seen a big rise in online advertising spending, but not as high as some predicted.
It’s tough to see into the future farther than a minute at a time, at best. A lot of smart firms with savvy analysts and plenty of industry contacts make predictions on business performance. Sometimes those predictions pan out; other times they prove spectacularly wrong.
MediaPost discussed the most recent Nielsen Monitor-Plus figures for online ad spending. In the first six months of 2005, those ad spends increased 12.6 percent over last year. Billions of dollars have found their way into the pockets of places like Google and Yahoo.
MSN and Ask Jeeves want to join that party, and AOL has been feverishly converting its former subscription-based model to one where content is king and the piper gets paid based on click-through rates. How high can online ad spending go?
It isn’t too clear, even for the best prognosticators. MediaPost notes JupiterResearch predicts $5.1 billion in online ad spending for 2005, a 25 percent increase. Goldman Sachs weighed in with a prediction of 28 percent, while Forrester fixed 23 percent as its target. The eMarketer firm has put on very rose-colored glasses and sees 34 percent growth for the year.
Ad spending takes off in the latter part of the year. Sellers of products and services all want to capitalize on holiday spending habits, and competition for keywords and phrases will increase. The soaring price of oil hasn’t dampened the economy yet, and for high-income households probably won’t hurt much anyway.
Still, it’s a good time for SEMs to determine if they are spending as smartly as they can on their initiatives. Even if the forecasts of 23+ percent by the aforementioned firms proves wrong by half, that’s still a lot of money competitors may be spending.
David Utter is a staff writer for murdok covering technology and business. Email him here.
