Study Says Broadband Reaches Tipping Point

Rapid Adoption of High-Speed Internet Opens Door for Advertisers

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NEW YORK ( -- The growth of broadband has reached a tipping point and is a powerful driver in the growth of online advertising in the U.S., a new study on the growth of global entertainment and media by PricewaterhouseCoopers said.

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In 2005, broadband penetration in the U.S. is expected to reach 39 million households -- nearly half of all online households. "Broadband in the home has reached critical mass, which is important because that's the minimum scale for advertisers to [feel comfortable advertising online]," said PricewaterhouseCoopers's director of advisory services, Peter Petrusky, who provided expertise for the study's Internet section. "The growth of broadband will be one of the big growth stories for 2005."

Ad-friendly formats
The rapid adoption of high-speed access to the Internet -- a growth rate of more than 20% since last year -- provides advertisers with formats such as video advertising, which big brands are accustomed to. "It opens the door to advertisers who up until now have just dipped their toe in online advertising," Mr. Petrusky said.

And those advertisers are expected to spend more and more. Online ad spending will climb from $36.7 billion in 2004 to $54.2 billion in 2009 -- an 8% growth compounded annually.

While the use of broadband is expected to almost double between 2004 and 2009, going from 32.5 million to 62 million in five years, dial-up usage is plummeting. In 2004, dial-up households numbered 42.8 million. By 2009, there will only be 31 million dial-ups.

People expect speed, rich media
People now expect speed and rich media online, Mr. Petrusky explained. They see the Internet as necessary -- "an information utility."

Concurrently, as TV viewership declines, consumers spend up to 20% of their time on the Internet. "This medium is capturing more than its fair share of the consumption pie when it is still only capturing 4% to 5%" of the ad spending, Mr. Petrusky said.

That is destined to change, he said. "History has taught us that money follow eyeballs."

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