@ UBS Media Week: Online Ad Growth Continues Through 2010; Video, Mobile Skyrocket

2 Comments

ZenithOptimedia and Universal McCann presented buoyant internet ad outlooks for the next four years to kick off the UBS Global Media & Telecommunications Conference. Both Bob Coen, SVP and director of forecasting for UM, and Steve King, CEO-Worldwide, ZenithOptimedia, addressed the fears of an ad recession by contrasting the current situation with what occurred during the dot-com bubble burst in 2000 and 2001.

Coen: “Looking back at the past seven years to the plummet in 2001, dot-com brands are not averse to taking advantage of pricing pressures.” Coen predicts that online ad spend will rise 20 percent this year in the U.S. to $10.9 billion.

King: Turning to more current concerns, King also said he saw little similarity with the last ad recession: “The advertising situation is very different from 6 or 7 years ago, when you had the ad bubble. Today, you have a lot of new media companies out there, but rather than trying to create frothy, unsubstantiated demand like before, many of these new media companies are actually creating an increasing amount of supply. Secondly, ad spending is much more in line with GDP, whereas during the last ad recession of 2001, ad expenditures raced much farther ahead.” Some other highlights from his presentation included: Lots more after the jump…

— Google’s (NSDQ: GOOG) market cap: Looking at the different ways of gauging online media’s importance, King noted that the largest media owner by market cap today is Google with $207 billion, dwarfing News Corp. (NYSE: NWS) at $63 billion.

— Ad growth slowing: Global internet ad spend was 29 percent in 07 vs. 06, while growth is only 19 percent 2008 compared to 2007. “We’re seeing online video grow for the first time. Internet will double between 2006 and 2010.”

— Layers of TV revenue: Mostly from advertising, with pay TV catching up followed by product placement and online video. Online video is less than 1 percent of the total, but is growing at 6 times the rate of traditional TV advertising.

— Internet ad breakdown: Online: Paid search will go from $5 billion in 2006 to $9 billion by 2010. This is not replacing traditional advertising where we push messages out. Classified will increase from $2 billion in 2006 to $4 billion in 2010, with most of that money coming at the expense of newspapers, particularly in recruitment and housing classified.

— Mobile, though still small, is growing at 10 times the rate of the other sectors and by 2010 will be worth $500 million in the U.S.

2 Comments

Comments are closed.