U.S. Online Ad Growth Underway

U.S. online advertising spending is expected to account for $8.1 billion of the country’s $293 billion total media budget by 2006, marking a return to 2000’s Internet spending spree figures.

Aggregated data from eMarketer reveals online ad spending to reach $6.3 billion by the end of 2003 for a 4.8 percent growth rate over 2002’s $6 billion, and slowly climbing to $6.8 billion in 2005 and $7.2 billion in 2005. Internet ad spending experienced 12.2 percent growth just in the period between Q1 2002 and Q1 2003 – $1.355 billion to $1.520 billion.

U.S. Total Advertising Spending (in billions)
2000	$247.50
2001	$231.30
2002	$236.75
2003	$248.25
2004	$263.50
2005	$277.50
2006	$293.00
Note: eMarketer benchmarks its U.S. ad spending projections against Universal McCann, for which the last period, measured was 2002.
Source: eMarketer, June 2003

Final figures from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers revealed “keyword search” as the growth leader of 2002, accounting for 15 percent of ad revenues – compared to 4 percent in 2001 – and the category earned 21 percent of total ad format revenues in 4Q 2002.

“We are very encouraged by the strong revenue results for the second half of 2002. This data supports the anecdotal information and other signs that are resulting in impressive balance sheets for most of the top ad sellers and we think the industry is positioned to experience incremental and sustained growth over the next few years,” said Greg Stuart, president and CEO, IAB.

Stuart credits a changing media landscape and the commitment advertisers are making to reinforce relationships with their customers as they become increasingly more reliant on the Internet.

Keyword search chiseled away at the remaining ad spending categories, with the biggest drop going to “sponsorships” – 26 percent in 2001 compared to 18 percent in 2002. “Banners” continued to lead the spending at 29 percent, down from 36 percent in 2001, and “classifieds” dropped one percentage point to 15 percent.

In 2002, consumer advertisers continued to spend the most dollars on online advertising (32 percent), with retail consumer advertisers as the largest segment (42 percent) in the major consumer category. The computing and media categories held steady through the year at 18 percent and 12 percent, respectively, while financial services gained one point to 13 percent in 2002.