Online ad revenue 'to surpass £40bn by 2011'
Growing Internet usage will boost global Internet advertising revenue to $81.1bn (£41.9bn) by 2011, according to new research from Piper Jaffray & Co.
The figure is more optimistic than a report by PricewaterhouseCoopers last year, which predicted that internet ad revenue would reach $51.6bn in 2010, based on an annual growth rate of 18.1%. Piper Jaffray's report predicts growth of 21%.
Other aspects of the report include:
• The user revolution
Piper Jaffray believes that the advertising world is going through a revolution. As passive consumers become more informed about purchase decisions, and take control of the consumption of content, this will cause a significant rise in the prominence of the internet as a ‘major content consumption and marketing medium’.
With the popularity of social media sites, the internet has become a principal medium for community, communication, and entertainment, hence the term. Piper Jaffray predicts that this will partially replace other forms of media, from magazines to television.
• The internet is mainstream
The internet is now a mainstream media outlet and rivals traditional media for reach and advertising revenue. By 2011, the report predicts that the internet will be second only to television.
• Search will dominate
Searching is the second most popular activity on the web, behind email. The report identifies five key trends in search:
1. Search engines are replacing portals
2. Search is becoming a branding tool
3. Google’s dominance is increasing;
4. Local search remains a looming opportunity
5. New search technologies are likely to expand the field.
• Ad networks
Due to internet fragmentation, online ad networks are experiencing increased demand. The report predicts that affiliate marketing will remain a vital marketing channel for advertisers due to its high ROI proposition.
For the global ad figure of $81.1bn, the report bases its predictions on growth of internet use worldwide, and that the adoption of online advertising is occurring at a faster rate worldwide than in the US.
In the UK, for instance, the internet accounts for around 10% of total ad expenditure, and this is expected to reach 20% in the next three years.
Piper Jaffray says the explosion of niche content online will also drive online spending by smaller advertisers on ad networks.
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