Online Ad Spending Continues To Surge In 2007, But Growth Tightens In 2008: Report

As a number of online media spending forecasts have suggested recently, internet ad dollars are expected to remain strong throughout this year and next. But looking ahead at growth rates, those year-over-year percentages are beginning to narrow, according to research by Magna Global, which found that ad spending for 2007 and 2008 will grow at roughly 30 percent. This year, the emerging media category (search, digital billboards and emerging out-of-home, social networking, VOD/advanced TV, mobile marketing and gaming) is expected to total $11.5 billion, a 31 percent rise over 2006. In 2008. the total spending on emerging media is predicted to hit $14.7 billion, up 28 percent.

Looking at the individual segments:

— Search will continue to dominate this year, posting an estimated 29 percent increase to $8.7 billion, with the expectation of a 26 percent rise in 2008 to $11 billion.
— Social networking should see the largest jump this year, rising 148 percent to $685 million. Next year, Magna forecasts 48.9 percent growth to $1.02 billion in ad dollars.
— The second biggest growth is likely to be seen in the mobile segment, which is estimated to come in this year at $105 million, up 90 percent from 2006’s $55 million. Next year, it could grow to $194 million, up 84.8 percent.

Brian Wieser, SVP, director, Industry Analysis for Magna, does not view the shrinking or flat growth rates as evidence of a possible slowdown: Even to call it a deceleration would be misleading. This is just the law of large numbers and existing inventory. The numbers for the emerging media segments are still growing at a very healthy clip.”

Universal-McCann: Magna issued its report during the annual media spend forecast presentation by Interpublic Group sibling, Universal-McCann. The agency’s research veteran Robert Coen revised his December ad industry forecast downward to 3.1 percent ad spend growth over 2006, from a December calculation of 4.8 percent. Coen expects internet advertising to rise 17 percent in 2007 to $10.6 billion. Coen’s report is available here (PDF). Magna’s forecast is not yet available online.

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