US online spend is forecast to grow 23.3% this year, according to a February 2012 forecast from eMarketer. The fastest-growing categories will be video (54.7%), sponsorships (27%), and search (27%), although banners (19.8%) and lead generation (18.5%) will also see double-digit growth. And after declining by 31% in 2011, email ad spending is expected to grow 3.1% this year.
March 2012 data from Kantar Media indicates that although ad spending on the internet fell 6.2% in Q4, overall spending for the year grew a marginal 0.4%.
Internet advertising revenues in the US hit new highs in Q3 2011, reaching $7.88 billion, representing 22% growth from Q3 2010 and a 2.7% increase from the previous peak in Q2 2011, according to November 2011 figures from the Interactive Advertising Bureau (IAB). Looking at long-term historical performance since 1996, Q3 internet ad revenues have risen year-over-year in all but three years: 2009, 2002, and 2001. Revenues experienced a decline and temporary plateau in 2009, when Q2 revenue was $5.4 billion, but began to rebound later that year, demonstrating healthy growth aside from slight seasonal dips in Q1 2010 and Q1 2011. Online advertising’s impressive growth is seen more starkly when comparing Q3 figures this year to a decade ago: in Q3 2001, revenue stood at just $1.8 billion, or about $2.3 billion in constant dollars.Recent topline estimates for internet advertising revenue can be found here.
Top Category Leaders
According to eMarketer, the leading US online advertising categories by share in 2012 will be search (49.4%), banners (23.3%), and video (7.9%), followed by classifieds and directories (6.4%), lead generation (4.9%), rich media (4.2%), sponsorships (3.5%), and email (0.4%).
Data from the IAB indicates that in H1 2011 the leading advertising categories [pdf] leading categories by share were: search (49%); display related (37%) – including banner ads (23%), digital video (6%), rich media (5%), and sponsorship (3%); classifieds (8%); referrals/lead generation (5%); and email (1%).
Meanwhile, in H1, performance continued to be the leading revenue pricing basis, followed by cost per medium/thousand (CPM) or impressions, with hybrid the least popular.
eMarketer forecasts search revenues to grow 27% in 2012, while a MagnaGlobal January forecast expects paid search to increase by 12.6%.
By contrast, Kantar Media figures released in March 2012 showed paid search budgets in Q4 were 6.4% lower compared to a year ago, while for the entire year, they dropped 2.8%.
Google is the dominant leader in the search market, garnering 83% of US spend share and 82% of US click share, while controlling 65.5% of overall US search volumes, according to [download page] a July 2011 report from Marin Software. eMarketer data indicates that Google’s search revenues reached $8.83 billion in the US in 2010, representing a 71.4% share of the $12.37 billion market. Yahoo (10.4%), Microsoft (10.2%), and AOL (2.3%) followed, meaning that the top 4 web properties controlled 94.3% of all search advertising revenue in 2010. This year, eMarketer projects search revenue to grow almost 10% and hit $13.59 billion.
eMarketer estimates that Facebook beat out Google in 2011 with 14% of total US online display ad revenues, compared to Google’s 13.8% (and Yahoo’s 10.8%). However, the company predicts that Google will overtake Facebook in 2013, to take 19.8% share of total display ad revenues, compared to 17.7% for Facebook, with that gap widening in 2014 (21.7% vs. 17.1%).
Together, the top 5 ad-selling companies are projected to control 50.7% of the $15.39 billion display ad market this year, up from 47.4% in 2011, and rising to 54.4% share in 2014.
According to Kantar Media, display investments fell 5.9% in Q4 2011, dragged down by smaller budgets from auto manufacturers, telecom providers and travel companies. For the entire year, display increased 5.5%.
eMarketer expects US online video ad spending to grow by 54.7% in 2012, before decreasing to 18.9% growth in 2016. Over that time, video will grow from 7.9% of total US online ad spending to 15%.
MagnaGlobal’s January forecast predicted a relatively less bullish outlook for online video, with the format growing 22.4% in 2012.
Top Online Advertising Industries
Retail (23%), telecom (14%), financial services (13%), auto (11%), and computing products (10%) were the top 5 industry categories by internet ad revenues in H1 2011, all maintaining their positions from H1 2010, according to IAB data (see link above).
Top 10 Global Internet Ad Markets
The US, by virtue of its sheer size, is the largest online advertising market in 2011, with $154.9 billion in total ad spend, according to Zenith Optimedia. The next largest market is Japan ($45.4 billion), followed by China ($29.9 billion), Germany ($24.82 billion), and the UK ($18.4 billion). Brazil, France, Australia, Canada, and Italy round out the top 10.
The report used 2010 average rates for its currency conversions.