Online Ad Growth to Outpace Total Ad Growth

September 2, 2010

Online advertising will grow at a faster pace in 2011 than overall advertising, according to estimates from Borrell Associates.

Online Ad Spending to Reach $52B
Borrell Associates analysis indicates total online ad spending (including mobile) will grow almost 14%, from $45.6 billion in 2010, to $51.9 billion in 2011.


Overall, advertisers will increase their spending next year by less than 5% above this year’s projected level, bringing US ad spending totals to $238.6 billion. This means online advertising will account for about 22% of total ad spending.

Display Will Grow 60%
The fastest-growing segments of online advertising are the targeted, the local sector, and social media. The big driver will be targeted display (such as banner ads) advertising, which Borrell expects to grow almost 60% in 2011, reaching $10.9 billion for national and local combined.

While national advertisers will increase their use of targeted display by nearly 50%, local advertisers will outperform even that. Use of targeted display by advertisers local to the markets where their ads run will more than double, reaching more than $2.3 billion next year.

Local Waxes, Run-of-Site Wanes
By next year, local online advertising should grow by almost 18%, from $13.7 billion in 2010, to $16.1 billion in 2011. However, run-of-site display should continue to lose spending. Sales of run-of-site display ads are expected to drop nearly 14% from this year’s level, or $9.5 billion to $8.2 billion for both local and national.

Borrell says this early online format has been overshadowed by newer, more productive ad formats, and competition has pushed display unit prices down. Most of the spending decease will come from national advertisers. Local run-of-site ads are forecast to decrease less than 3% next year.

Nat’l Paid Search also Loses Popularity
The national paid search ad format will experience a double-digit spending decline next year, moving down 11.3%. This drop will be caused by lower pricing and churn, but will be mitigated by a local advertiser increase of more than 10%. In general, Borrell analysis suggests local online advertiser trends tend to lag those of the larger national advertisers by about two years. Local spending decreases in paid search will likely follow, possibly as soon as 2012.

Email Ads to Increase 9%
Email advertising will see moderately strong growth in 2011, up 9% to $16 billion for national and local. Growth in this format will come almost all from national advertisers; with only 3% local. White paper marketing is a major contributor to its popularity, especially among B2B advertisers.

Streaming Video Shows Strength
The streaming video format is expected to continue its dramatic growth, increasing more than 60% to $5.6 billion next year. More DIY and less expensive tools put this ad format within the budgets of even small advertisers.

Because of this, Borrell predicts two out of every five streaming video ad dollars will come from local advertisers next year. Streaming audio, on the other hand, looks to remain a footnote. Though it too will enjoy double-digit ad spending increases in 2011, streaming audio has yet to pass the $1 billion ad spending level.

Coupons to Drive Online Promos Growth
Online promotions will top $24 billion next year, up 10% from this year’s totals. Much of this increase will be due to the rising use of online couponing, forecast to grow almost 14%, to $9.1 billion, in 2011.

Mobile Ads Continue Growth
Proximity advertising is also on the rise, up 11% next year. Mobile devices that can tell users when a particular merchant is in their immediate vicinity continue to sell briskly, and advertisers are expressing interest in this form of advertising.

Mobile marketing continues to grow, fueled by ubiquitous apps, user-friendly browsers and 3G/4G speeds. As smartphone ownership now comprises 25% of all cellphone ownership, mobile ad sales will enjoy growth of more than 20 cents of every online ad dollar spent next year.

BrightRoll Video Leads Ad Reach
BrightRoll Video Network led the July 2010 Ad Focus ranking with a potential reach of 96% of Americans online, followed by SpotXchange Video Ad Network with a 93% reach, according to Media Matrix data from comScore.

YuMe Video Ad Network climbed four spots to capture the number three ranking with an 89% reach.


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