14 DAY TRIAL // Microsoft, Yahoo and Google are currently dividing between them the large majority of no less than $65.2 billion, which is the worldwide spending on Internet advertising this year, according to market analyst company IDC. But between 2008 and 2011, just four years from now, Internet spending will explode to no less than $106 Billion. "Compared to more mature types of advertising, Internet advertising is growing at a phenomenal rate," explained John Gantz, chief research officer at IDC.
At the start of February 2008, Microsoft indicated that it was ready to pay no less than $44.6 billion for the acquisition of Yahoo. A marriage between the Redmond and the Sunnyvale companies would have resulted in more balanced search engine and online advertising markets, spaces currently dominated by Google. With Microsoft and Yahoo reportedly still in negotiations, but with the latter having already signed an ad agreement with Google, the online advertising market's top three players are yet to reach equilibrated positions. Taking into consideration the partnership between Google and Yahoo, Microsoft is virtually pushed aside from the $106 billion advertising pie in 2011.
"But Internet advertising is still relatively new and growing from a much smaller base. By the end of the forecast period, spending for Internet advertising will trail direct mail - the third largest form of advertising - by more than $30 billion, while spending on TV and print ads will each be nearly twice as great as for online ads. The long-term opportunity for Internet advertising can be seen in the disparity between per capita spending. Total advertising revenues equate to more than $105 per inhabitant of the planet, while Internet advertising revenues are less than $50 per active Internet user," Gantz added.
No less than a third of all annual online ad spending will be represented by keyword ads. In this context, Google is likely to perpetuate its current position of leader on both the search engine and Internet advertising markets. IDC estimates that display ads will also grow in relevance, accounting for as much as 20% of ad spending. Still, at the same time, the real "money maker" in terms of advertising spending will be rich media ads, for which IDC estimates a compound annual growth rate of over 50% until 2011.
"Marketers already recognize that online advertising must be incorporated into any comprehensive ad strategy. This will continue to drive growth in online ad spending well beyond the forecast period. However, there is still a lot of experimentation underway within the category as marketers seek the optimal mix of ad types to reach their target audience. This will fuel spending for all types of online ads," revealed Karsten Weide, program director, Digital Media and Entertainment.