Forecast: Online to Reach 9 Percent Share of Ad Spend in 2011

Online advertising will grow to represent 9 percent of overall advertising spending by 2011, and search will continue to be the driver of growth. That’s according to the latest JupiterResearch forecast, “U.S. Online Advertising Forecast, 2006 to 2011.”

The researchers pegged online advertising to reach $25.9 billion in revenues by 2011, rising at a compound annual growth rate (CAGR) of 11 percent over the next five years.

Search is expected to continue to lead growth, increasing from 41 percent of all online ad spending, or $6.5 billion, in 2006, to comprise 43 percent of online ad spending, or $11.1 billion, by 2011. JupiterResearch attributed that rise to higher keyword prices, new marketers entering search and the usage of larger keyword lists.

Display advertising, which is forecast to reach $9.2 billion in 2011, will be marked by dramatic growth in certain of its subsets. Rich media spending is expected to climb at a 21 percent compounded annual growth rate, while video expenditures are forecast to increase at a 27 percent CAGR through 2011. Broadband adoption and traditional advertisers’ fondness for the formats are the trend’s drivers, according to Jupiter analysts.

Text ads, the report concludes will see slower growth, in part because publishers will abandon the contextual links that are currently popular. That’s because they’ll figure out ways to better monetize remnant inventory via rich media and behavioral targeting.