August 18, 2005, 12:00 AM

Online advertising market to reach $18.9 billion in 2010, Jupiter says

Marketers’ spending on search advertising will overtake standard online display advertising in five years. Spurred by households’ increased adoption of broadband, rich media ad spending will increase at a 25% compound annual growth rate to $3.5 billion.

Online advertising will be an $18.9 billon market by 2010, according to a new study from Jupiter Research, with spending on PPC ads to overtake spending on impression-based ads. Jupiter’s Online Advertising Forecast reveals that projected spending in 2010 will double the $9.3 billion spent on online advertising in 2004.

The rapid pace of expected growth reflects advertisers` confidence in the online medium and in particular, the strength of advertising on search engines. Jupiter forecasts that display ads will grow at 7% and search advertising will grow at a rate of 12% over the next five years. “The number of advertisers using search to market products continues to grow, as does the overall efficiency of the market – search engines are getting even better tat making money off search engine results pages, says Jupiter Research analyst Gary Stein.

However, Jupiter notes the rise of search engine marketing is only one element of the overall growth in the online advertising market. Online classified advertising is expected to grow by 10%, reaching$4.1 billion in 2010. Spurred by the increasing adoption of broadband in U.S. households, rich media’s use among online advertisers is expected to grow, with spending at a compound annual growth rate of 25%, expected to reach $3.5 billion in five years. Ending on streaming media among advertisers will grow at a 30% CAGR to $943 million by 2010.

Jupiter notes that the bulk of performance-based ad inventory will come from as network providers, which are improving their use of targeting technology to improve results for publishers.

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