TNS Sees 14.4 Percent Growth for Display Ads in 2008

Internet display advertising will leap 14.4 percent this year, growing its share of all U.S. ad expenditures to more than 8 percent, according to TNS Media Intelligence. While more aggressive by half than projected increases in other channels, the anticipated digital growth rate is down slightly from 2007, when TNS found online ad expenditures for the first nine months of the year grew 17.2 percent to $8.4 billion.

TNS expects the Internet will represent 8 percent of ad spending for the 24-month period covering 2007 and 2008, according to TNS’s forecast, compared with 17.2 percent for newspapers, 21.1 percent for magazines and 44.1 percent for television.

Yet it’s projected to grow considerably faster all other media mentioned in the forecast, including closest contenders spot television (9.9 percent), Spanish language media (7.8 percent), outdoor (5.5 percent) and cable network TV (5 percent). TNS believes several channels will exhibit weak growth, including radio (0.7 percent), syndicated television (1.3 percent) and network television (2.7 percent); while newspapers (-0.9 percent) and B-to-B magazines (-0.1 percent) will decline slightly.

Additionally, during the 24 months covering 2007 and 2008, TNS said ad spending online will for the first time surpass radio in the U.S.

TNS also noted the Olympics and 2008 Presidential race will bring a general increase in ad spending, but John Swallen, SVP of research for TNS Media Intelligence, doubts the Internet is well-positioned to benefit hugely from either event.

“I think there’s potentially some benefit from election advertising,” he said, but added political marketers’ interest in the Web still favors content-driven approaches over media planning ones. “Although campaigns are learning how to utilize and manage the world of blogs, they haven’t quite yet learned to manage the world of Internet advertising.”

The slower projected growth rate this year is consistent with earlier reports from the Interactive Advertising Bureau and Nielsen, and is something most people familiar with digital marketing see as the inevitable byproduct of maturity in online advertising.

“Internet display growth rates are beginning to ease and will continue to ease through 2008,” said Swallen. “It doesn’t reflect a weakness in the larger Internet world.”