Ad spending rose across all online formats between 2002 and 2003, according to eMarketer, about 20.9% to $7.3 billion. That rate of increase is expected to accelerate this year, with eMarketer projecting a 25.2% gain to $9.1 billion in 2004 over 2003. “News such as Google`s impending IPO and Microsoft’s entry into search heightens the focus on Internet ad vehicles and the money behind them,” says senior analyst David Hallerman in eMarketer’s recent report, “Ad Spending in the U.S., Online and Offline.”
Paid search got the lion’s share of 2003’s estimated $7.3 billion in ad spending, accounting for about 35%, according to eMarketer. Total spending on search was up 174.3% over the pervious year. eMarketer projects that paid search will still represent the largest share of online ad spending by format, 39.5%, of all online ad spending in 2004, about $9.1 billion.
However, paid search’s growth rate in 2004 over 2003, 41.3%, will slow down considerably from that of a year earlier. The growth rate in spending on online rich media advertising between 2003 and 2004 at 64.4% will eclipse that of paid search. Rich media formats got 8% of the total $7.3 billion online ad spend in 2003 and will get 10.5% this year, eMarketer projects.
After dropping 9.3% from 2002 to account for 3% of 2003’s total online ad spending of $7.3 billion, spending on e-mail advertising will continue at about 3% of 2004’s total spending on online advertising. As paid search and rich media formats gain this year over last as respective percentages of total online ad spending, other formats will drop as a percentage of total spending, eMarketer projects. Among these are online classified advertising, projected to drop to 16% of 2004’s total $9.1 billion ad spend from 17% of 2003`s total $7.3 billion ad spend; and display ads, projected to drop to 16% of this year’s online ad spend from 21% of last year’s.