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Double-Digit Bounce Back for Online Ad Spend

10.8% growth in 2010 US Internet ad spending

eMarketer has revised its forecast to predict a steeper increase of nearly 11% for US online ad spending in 2010, after a drop of 3.4% last year.

US spending on online advertisements will reach $25.1 billion, up from $22.7 billion. eMarketer’s previous prediction, in December 2009, was for 5.5% growth. A stronger-than-expected search and banner market, along with the rush among advertisers for greater accountability in the still-soft economy, led to the revision.

“As Google makes gains, so does a large slice of online advertising,” said David Hallerman, eMarketer senior analyst and author of an upcoming report on US advertising spending. “When Google reported a 21% jump in net US ad revenues for Q1 2010—compared with a mere 5.3% gain in last year’s Q1—that was a key signal that the tide was turning.”

The search market will be up 15.7% year over year to almost $12.4 billion, while spending on banner ads will increase 8.2%. Video will again post the highest growth rate, rising 48.1% to $1.5 billion.

Brand marketers increasingly realize they need to engage their target audiences where they spend time—and that's more and more in the digital space.

“Display ad revenues at Yahoo! reflect that trend,” noted Mr. Hallerman. “Even as the portal’s overall net US ad revenues were down 4.5% in Q1 2010, the display ad component on Yahoo!’s sites were up by 11.7%”

Further, as marketers pull dollars away from now-weak media such as newspapers and radio, they are shifting a portion of that spend to the Internet. In addition, growth in online video advertising is bolstered by some marketers shifting dollars from their huge TV budgets.

The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC), eMarketer’s online ad spending benchmark, reported Q1 2010 spending up 7.5% year over year. eMarketer predicts even greater double-digit increases each quarter for the rest of 2010.

”Overall, the US economy is recovering a bit sooner than last year’s data led us to believe,” Mr. Hallerman said. “For example, not only did the GDP increase by 3.2% in Q1 2010, but there was a corresponding 3.6% gain in personal consumption expenditures.

”And greater consumer activity is one of the prime motivators for greater advertising spending,” he added.

Keep your business ahead of the digital curve. Learn more about becoming an eMarketer Total Access client today.

Check out today’s other article, “Women Take Lead on Mobile Coupons.”

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