Internet Advertising to Double in Five Years

By 2010, spending on Internet advertising will account for 10 percent of total U.S. ad dollars, according to “The Changing Face of Advertising in the Digital Age” from Parks Associates.

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The 10 percent share is double the commitment for online ads in 2004. The increase represents a CAGR (define) of 14 percent each year through 2010.

Roughly 21 percent of Internet users consider Internet advertising to be the most relevant ad format. The segment overtakes traditional media, such as newspapers, magazines, and radio.

Metrics and behavioral targeting make the channel attractive. “Because the Internet is an interactive and versatile platform and offers rich consumer usage data, advertisers can improve their ad targetability and achieve better results,” said Parks Associates research analyst Harry Wang.

Due to audience and media fragmentation and a lack of in-depth media consumption data from traditional advertising, large companies and established brands will move dollars from TV and other formats to the Web. Anheuser-Busch, Procter & Gamble, Verizon, and Wachovia have already moved portions of their budgets to online advertising.

“The Internet has altered the standard for the entire ad world, and traditional media have to respond by making their media platforms more interactive and results-oriented,” said Wang.

The report was compiled from the findings of an Internet-based survey of 2,084 U.S. consumers in households with Internet access. The sampling group includes 270 teenagers ages 13 to 17. The report contains data from Parks Associates’ consumer study “Digital Entertainment: Changing Consumer Habits.”