Online Ad Spend to Continue Growth Through 2010

An ad spend forecast released yesterday by ZenithOptimedia expects online ad spending to surpass magazine advertising in 2010. That’s one of three major milestones for online advertising in the three-year forecast.

In 2008 online is expected to overtake radio advertising in terms of spending, a prediction included in an earlier forecast. The following year online advertising’s share of the total global ad spend is expected to reach a double-digit share of 11.5 percent, and then 15 percent in 2010.

“Looking globally, the Internet still has a lot of room to grow,” said Jonathan Barnard, head of publications at ZenithOptimedia. “Formats like Internet video are still quite unexploited.” Barnard said one bottleneck for online advertising is available talent.

Globally, the degree of online ad spending can vary. Barnard said the online ad spend in China already equals 8 percent of the total spend, and expects it to reach 15 percent (about $3.7 billion) in 2010. While China may be considered aggressive in terms of Internet advertising, the top four markets in the category are Denmark, Norway, Sweden, and the U.K. where online will likely exceed 20 percent of total spending in three years.

Recent ad spending reports warn of slower growth in both online and overall spending, though the ZenithOptimedia forecast expects to see an increase in inventory from Internet startups.

ZenithOptimedia, in the study, recognizes that some fear the new generation of dot-com companies will trigger a bubble, much like the one that hit earlier this decade.

This time, ZenithOptimedia said, it will play differently for the ad market. Last time around, companies spent their funding on advertising instead of building business. The new breed of start-ups have based their business models on selling advertising rather than buying it.

“Instead of raising money in order to advertise, they’re raising money to capture Internet revenue,” said Barnard.

“We don’t yet know what ventures will work best, and what ventures will capture the attention of other people.” An example, Barnard offered, “Nobody saw Google coming, nobody saw Facebook coming. The most successful ventures have been the ones to come up with a use for the Internet nobody’s thought about before.”