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Internet advertising shoots past estimates

US spend reaches $7.9bn

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Predictions are rarely low in the high technology business, but consistently the targets set for internet advertising are over achieved by reality. This week the Interactive Advertising Bureau and PricewaterhouseCoopers released their half year figures for 2006, and it totalled up to a $7.9bn spend in the US.

At the end of last year these same two forecast a $15bn market for US advertising and last quarter gave a heads up that it had already reached $3.9bn, growing at 38 per cent, rather than the 30 per cent plus that was originally forecast.

This quarter took it beyond $4bn up 36 per cent and the likely result for the year end is going to be closer to $16.5bn, perhaps higher.

"The latest results reaffirm the internet's growing importance for marketers to integrate online advertising into their overall media plans," said David Silverman, Partner, Entertainment and Media Practice, PricewaterhouseCoopers.

"While search advertising remains the largest format in terms of revenues, we expect to see new formats like video ads to continue to emerge as advertisers seek to leverage the branding opportunities afforded by the growing installed base of broadband users."

The implication that video advertising has yet to make a dent in these figures is all important. Video advertising is rising exponentially, but is still a fraction of the internet advertising that's already there. Once it begins to make up a significant proportion of advertising, it's likely that the internet advertising spend will increase further, rather than slow down.

Copyright © 2006, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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