Online advertising will grow in 2005

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Online advertising is expected to grow by at least 20% in 2005, according to reports from several media research firms.

Internet research firm eMarketer projects that online ad spending will reach $11.3 billion next year, up 20.7% over online ad revenue expected for 2004. That growth rate is down from a projected growth rate of 28.8% between 2003 and 2004, eMarketer estimated.

"I see more b-to-b companies finding ways to use search," said David Hallerman, senior analyst at eMarketer. "Search overall will not be increasing at the same rate as in past years-with triple-digit increases-but we project it will grow in the 50% range."

Hallerman added, "Search has been a more consumer-focused trend, but marketers are finding ways to use keywords to reach a b-to-b audience."

EMarketer benchmarks its online ad spending projections against the Interactive Advertising Bureau Ad Revenue Report, conducted by PricewaterhouseCoopers.

By 2008, online ad revenue is expected to reach $17.5 billion, according to eMarketer's forecast.

Kagan Research is even more optimistic, projecting online ad spending of $11.5 billion in 2005, up 21.6% over a projected $9.5 billion this year.

Unicast, an online advertising technology company, reported that more than 70% of respondents to a survey of its advertisers and agencies plan to increase their online ad spending in 2005.

According to the Unicast study, advertisers are embracing online video as an effective advertising medium. The survey found that 12% of respondents consider online video more important than other online vehicles, and 88% said video is at least as important as other online vehicles.

 -Kate Maddox

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