NEW YORK, NY (November 7, 2007) Advertisers are well on the way to spend $21.4 billion on the Internet in 2007, says eMarketer’s new online ad spending report. By 2011, spending on advertisements online is expected to reach $42 billion.

One big trend is that the nation’s largest advertisers are shifting more of their budgets from traditional media to the Internet, according to eMarketer’s calculations.

• Among Advertising Age’s “100 Leading National Advertisers,” 69 of them allocated a smaller share of their total ad budgets toward the four traditional measured media—TV, radio, newspapers and magazines—in 2006 than they did in 2005.

• More than half, 58 of those same advertisers, decreased their spending share going to the four traditional and increased the share going to the Internet.

• Combined, the 100 top advertisers spent nearly $230 million less on the Traditional Four media in 2006 compared with 2005, while boosting their Internet ad spending by $558 million.

What online advertising formats garner the largest advertising share? Search, display and classified ads, in that order, get the greatest shares of Internet spending, according to eMarketer.

• Paid search’s share of online ad spend will continue to hover in the 40% range through 2011.

• Display ads (such as static banners) will generate about 20% of Internet ad revenues through the decade.

• Classified ads, including those on newspaper sites and in places such as eBay, Monster or HotJobs, will contribute about 17%.

• Rich media, which includes video advertising, will rise from 8% share this year to over 13% in 2011.

• Social networking advertising numbers, currently being revised by eMarketer, are expected to increase from $900 million in 2007 to $2.5 billion in 2011.

While the current total media ad spending forecasts reflect economic anxiety, a downturn will affect online ad spending—but less so, says David Hallerman, author of the report.

• In contrast to the 26.7% growth projected for Internet advertising in 2007, total media ad spending will increase by only 2.1%.

• Mainly because of the credit crunch and related economic fallout, Internet ad spending will not increase as much in 2007 and 2008 as analysts previously expected. However, reduced spending will be tempered by advertisers buying the low-cost display advertising gobbled up by mortgage companies’ shrinking marketing budgets.

• As a highly accountable ad format, paid search is likely to get more of the mortgage companies’ shrinking budgets than display ads.

To receive a copy of the report, or arrange an interview with David Hallerman, contact the eMarketer media department.

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