August 8, 2005 11:20 AM PDT

Online advertising to skyrocket, study says

The next five years will witness steady growth in online advertising, with sales more than doubling from their 2004 levels, according to a new study from Jupiter Research.

Sales will reach $18.9 billion by 2010, the company said Monday, up from $9.3 billion at the end of 2004.

Leading the surge will be search engine marketing, which is expected to increase at a compound annual growth rate of 12 percent, the research company said.

Sales of display ads, meanwhile, will increase at a compound annual growth rate of 7 percent, the market researcher said.

Classified advertising is also poised to grow, according to Jupiter. That sector is expected to have a compound annual growth rate of 10 percent, with revenue of $4.1 billion in 2010.

Advertisers will be capitalizing on the growing number of broadband-connected homes by spending on rich-media and streaming-media ads, Jupiter said. Rich-media spending will rise at a 25 percent compound annual growth rate to $3.5 billion, the company said, while streaming-media revenue will rise at a 30 percent compound annual growth rate to $943 million.

Also adding to Web publishers' revenue will be direct sales and network revenue-sharing deals.

"Publishers are in a good position right now," David Card, a research director with Jupiter, said in a statement. "Not only can they monetize their nonpremium inventory, but they can strategically choose the network providers they feel can generate the most yield from that inventory."

Other research has also pointed to strong online-advertising revenue. In the first quarter of 2005, Web ad sales climbed to $2.8 billion, a 26 percent boost from same period in 2004, according to an earlier report from Interactive Advertising Bureau and PricewaterhouseCoopers.

Further, Forrester Research predicted recently that online advertising would jump to $14.7 billion in 2005--which would be an increase of 23 percent over 2004.

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Will online advertising finally take off?
Will online advertising be the next big thing?

Across the board we see more and more new advertisers getting their ads online but with much smaller investments. However the large search engines will for the most part not become part of this growth due to cost outlays for the little guy.
Let me ask you this! when was the last time you clicked on an advertisement when you checked your email or was looking in a search engine for information on something of interest to you? DID YOU notice how silent everyone was? try to call a friend and ask him/her this very same question. What do you think the answer will be? probably the same as yours.
Does this mean that online advertising does not work? ABSOLUTELY NOT, it works in a big way but more so as a branding tool and not for an immediate purchase from the end user. Nothing has actually changed over the last 25 years except moving the ads from one media to another. If this is what you thought you were dead wrong, advertising works online and it works better for many local advertisers than ever before, except not in all areas.
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