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The global advertising market reached $600 billion in 2007 and will grow at a compound annual growth rate (CAGR) of 2.7% to reach $707 billion in 2012, propelled in large part by growth in the interactive segment, according to a new report from The Kelsey Group.

Interactive Advertising Outlook

Interactive advertising revenues will increase significantly: from $45 billion in 2007 to $147 billion globally in 2012 – a 23.4% CAGR – according to “The Kelsey Group’s Annual Forecast (2007-2012): Outlook for Directional and Interactive Advertising.”

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Global forecast

Interactive advertising, which comprises search (including local search), display advertising, classifieds and other interactive ad products, grew its share of global advertising revenues from 6.1% in 2006 to 7.4% in 2007. By 2012, the interactive share of global ad spending will reach 21%, Kelsey Group analysts expect.

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US forecast

During the forecast period (2007-2012), the US interactive advertising revenues are expected to grow from $22.5 billion to $62.4 billion (a 22.6% CAGR); interactive revenues in Canada are forecast to increase from $1.3 billion to $3.3 billion (21.3% CAGR).

Directional Advertising Outlook

The Kelsey Group forecasts that directional advertising – comprising local search, print Yellow Pages and Internet Yellow Pages (IYP) – will grow from $33.3 billion in 2007 to $41.4 billion globally in 2012 (a 4.5% CAGR).

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Global forecast

The global outlook for each of the three key segments of the directional media market during the forecast period (2007-2012):

  • Local search revenues will grow from $2.1 billion to $6.6 billion (a 25.5% CAGR).
  • Print Yellow Pages revenues will decline from $27.5 billion to $25.6 billion (a -1.4% CAGR).
  • IYP revenues will grow from $3.7 billion to $9.2 billion (20.1% CAGR).

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US forecast
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During the forecast period (2007-2012), in the United States directional advertising revenues are expected to grow from $16.4 billion to $18.8 billion (a 2.8% CAGR), while directional revenues in Canada increase from $1.4 billion to $1.9 billion (a 5.8% CAGR).

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Canada forecast

Canada is one of the markets in which The Kelsey Group expects growth in the print Yellow Pages segment, forecasting a 1.8% CAGR for print directories in Canada during the forecast period.

“We expect printed directory revenues to decline in most global markets over the forecast period, though print will remain the most important source of leads for small businesses,” said Charles Laughlin, SVP and program director, The Kelsey Report, and managing editor, The Kelsey Group. “For directory publishers to succeed, they will need to invest time, energy and resources in both channels to minimize the decline in print and maximize the opportunity online.”

About the forecast: The Kelsey Group has published a five-year forecast covering the broadly defined directional and internet media market annually since 2003, drawing from its proprietary data, primarily the Local Commerce Monitor, User View and Global View studies, as well as from company, industry and country information in the public domain. This forecast does not include mobile ad platforms.

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