Local media research firm Borrell Associates has forecasted local display advertising expenditure to grow by 2.5 percent, from around $12 million in 2007 to $12.3 million in 2008.

Borrell also believes local online advertising will comprise a larger share of overall online ad spending in 2009, when local online ad revenues are expected to increase 11 percent over 2008 to be around $13.6 million.

Borrell expects local paid search advertising to grow almost 22 percent in 2009, while national paid search is expected to lose share, dropping from $12.4 million this year to $9.3 million next year.

Source: Kate Kaye, “Local Advertisers Are Glimmer of Hope for Web Ad Industry in Downturn”, The ClickZ Network, October 29, 2008

Local media research firm Borrell Associates has forecasted local display advertising expenditure to grow by 2.5 percent, from around $12 million in 2007 to $12.3 million in 2008.

Borrell also believes local online advertising will comprise a larger share of overall online ad spending in 2009, when local online ad revenues are expected to increase 11 percent over 2008 to be around $13.6 million.

Borrell expects local paid search advertising to grow almost 22 percent in 2009, while national paid search is expected to lose share, dropping from $12.4 million this year to $9.3 million next year.

Source: Kate Kaye, “Local Advertisers Are Glimmer of Hope for Web Ad Industry in Downturn”, The ClickZ Network, October 29, 2008

In August, eMarketer projected online advertising expenditure to grow by 16 percent between 2008 and 2009 – from $24.5 billion to $28.5 billion. Due to the current financial crisis and economic recession that have gripped, or are about to grip, many Western economies, eMarketer plans to revise downward its online ad spending prediction.

But while online spending may be more subdued in the coming year or so, eMarketer still expects it to grow significantly over the coming few years. This is due to seven (7) reasons that make the Internet an increasingly desirable advertising medium. The Internet:

1. Is more measurable and accountable than traditional channels.
2. Allows for better, more-granular targeting than other forms of media.
3. Is interactive, allowing for a higher degree of engagement with prospects and customers.
4. Accounts for more media time among various, particularly younger, consumers.
5. Taps into the ‘consumer-in-control movement’, enabling marketers to join consumers’ conversations.
6. Features web 2.0 phenomena such as blogs, social networks and Twitter that provide marketers with the ability to insight into consumer behavior and attitudes.
7. Allows marketers to reach prospects throughout the entire consumer buying cycle, from initial awareness, through pre-information-gathering, to purchase and post-sale support.

Source: Geoff Ramsey, “Online Ad Spending Will Keep Growing”, eMarketer, October 27, 2008

ClickZ reports that research by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers reveals a decline in the growth rate of online advertising expenditure.

In the first half of 2008, $11.5 billion was spent on online ads. While this constitutes an increase of over 15 percent over the same period in 2007, it’s much lower than the 37 percent increase in the first half of 2006 compared with 2005.

Also, while online ad spending in the second quarter of 2008 was 13 percent the second quarter of 2007, it was 0.3 percent lower than what it was in the first quarter of this year. In other words, online ad growth looks to be dipping.

Nevertheless, online spending was still significant in the first half of the year. Search engine ad spending (about 44 percent of all online ad spending) grew to $5.1 billion, up 24 percent over the initial half of 2007, while display spending (33 percent of all online ad spending) rose by 19 percent to $3.8 billion in the first half of this year.

Most display spending was devoted to banner ads (21 percent). The remainder was devoted to rich media (7 percent), video (3 percent) and sponsorships (2 percent). Meanwhile, spending on online classifieds decreased from 17 percent to 14 percent in the first half of the year and lead generation ad spending dropped from 8 percent to 7 percent of budgets. Email remained steady at 2 percent of online ad spending.

Finally, advertisers continue to embrace performance-based ad models. Performance-based ads, such as cost-per-click or cost-per-acquisition ads were up for 52 percent of ad spending in the first six months of this year, up from 50 percent in the first half of 2007. Meanwhile, CPM-based ad spending dropped slightly from 45 percent to 44 percent.

Source: Kate Kaye, “Online Ad Growth Declines in First Half 2008″, The ClickZ Network, October 7, 2008

Print advertising expenditure in the U.S. declined by 16 percent in the second quarter of 2008, dropping to $8.8 billion. According to Erick Schonfeld of TechCrunch, this marks the ninth consecutive quarter in which print revenues have declined, and at an-ever accelerating rate at that.

As a whole, the U.S. newspaper industry earned $1.7 billion LESS in print ad sales in the second quarter of 2008 than it earned in the second quarter of 2007. In terms of the first half of the year, the industry earned $3.1 billion less. In fact, revenue levels are down to 1995 levels.

To make matters worse, online newspaper ad sales were just $777 million in the second quarter, representing a decline of 2.4 percent compared with the year before.

TechCrunch points out that bundling print and online ad sales isn’t likely to be doing newspapers any favors. Advertisers used to buying bundles will typically drop the entire bundle when making budget cuts, rather than carve off print or online (as the case may be).

Actually, the bundling itself is surely another reason for lower revenues, since bundles typically involve a discount on the combined off-line and online offering.

Source: Erick Schonfeld, “Negative Momentum: Newspaper Ad Revenues Gaining Downhill Speed (Even Online Is Declining)”, TechCrunch, September 5, 2008

Here’s my forecast. I forecast that predictions of online video advertising expenditure will rise by at least 100 percent by the end of the year.

Well, that’s based on eMarketer releasing yet another forecast of online video ad spending – this time by video ad company LiveRail.

LiveRail predicts that U.S. online video ad spending will approach $1.4 billion in 2010, up from $619 million in 2008.

eMarketer, which bases its analysis on the forecasts of several firms, expects online ad spending in 2010 to reach $1.15 billion, up from $505 billion in 2008. While online video will represent 2 percent of total online ad spending in 2008, it is expected to reach 10 percent in 2013.

Of course, there are at least two reasons why all these companies keep issuing optimistic predictions of online video ad spending. Firstly, it’s logical that advertisers will spend more on a medium that does seem to be growing – eMarketer reckons more than 50 percent of U.S. consumers currently watch online video, with 90 percent expected to do so by 2012.

Secondly, they WANT advertisers to spend more on online video. Put it this way, if you’re a video ad company… or a company that provides services to online advertisers… you’re going to do what you can to attract more clients and bigger budgets, right?

Source: eMarketer, ” Online Video Ad Outlook Still Optimistic”, September 8, 2008

David Rodnitzky makes a good point in the Search Marketing Standard. If the recession starts to bite online publishers reliant on advertising revenues, maybe, just maybe, Google won’t be able to be so picky when it comes to favoring some advertisers over others.

Online advertising has continued to grow, especially as more money has been taken out of off-line budgets and into what is unquestionably a medium that continues to attract more and more consumers. However, the economic downturn occurring in the United States, the United Kingdom and elsewhere means that marketers will have less money to spend overall, resulting in slower growth in online advertising expenditure.

Google, although continuing to perform strongly, missed Wall Street’s first quarter forecasts and is not immune to the effects of slower growth in ad spends.

So… in an effort to save revenues, will it drop its Quality Score standard?

Google’s Quality Score standard was introduced in 2006 to help ensure that landing pages for Google Adwords ads were relevant to the ads being displayed. Advertisers that Google regarded as having landing pages that were NOT sufficiently related to their ads were penalized with substantially higher bid prices – the idea being to deter such companies from running such campaigns.

Mr Rodnitzky points out that it’s all very well for Google to deter “low quality” advertisers when there are plenty of other advertisers willing to replace them. But what if the number of other advertisers starts to wane?

What if falling or stagnating Google Adwords revenues mean that Google will continue missing forecasts UNLESS it attracts more advertisers… such as those companies running lower quality ads that Google previously spurned?

I doubt that Google is anywhere close to relaxing its quality score for now… and it would be loathe to do an “about face” on this… but time – and the economic downturn – will tell…

Source: David Rodnitzky, “Is Quality Score Recession-Proof?”, Search Marketing Standard, July 21, 2008

Research company IDC expects global online advertising expenditure to reach $65.2 billion in 2008 and soar past $106 billion in 2011.

According to IDC’s “Digital Marketplace Model and Forecast” report, spending on Internet advertising currently represents 10 percent of total media spending. However, with the research firm predicting 15-20 percent annual growth over the next three years, IDC believes the online share of total spending will increase to 13.6 percent by 2011.

Among other things, IDC’s report predicts that keyword ads will remain the dominant type of Internet advertising from 2007 to 2011, and will continue to capture more than a third of annual online ad spending. Twenty percent of online ad budgets will be devoted to display ads, followed by classified ads with nearly 19 percent of all online ad spending per year.

However, spending in display and classifieds will be pressured by rich media ads, which are expected to grow at a compound annual growth rate of over 50 percent during the 2007-2011 period.

The United States is expected to continue leading the world in online advertising spending (as it does in total advertising spending), being responsible for $45 billion of the worldwide Internet ad spend in 2011.

Meanwhile, the most popular online ad expenditure categories will continue to be adult content, gambling, information, electronics and computing, receiving $5 billion in worldwide ad expenditure over the next three years.

One major take-out for Internet marketers is that the online advertising space is only likely to become MORE competitive… and expensive. On the other hand, if you provide Internet marketing services, you’ll probably find more and more potential clients receptive to your offerings.

Source: IDC, “Worldwide Spending on Internet Advertising Will Soar Past $106 Billion in 2011, According to IDC”, IDC Press Release, June 25, 2008