After taking a beating over the past few years, online advertising is experiencing a recovery, spearheaded largely by paid search, according to Jupiter Research. Jupiter forecasts that paid search will account for about 50% of the growth in online ad sales over the next five years, projecting that online ad sales will reach $14.8 billion by 2008, equaling magazine ad spending by that time.
By 2008, paid search will account for about $4.3 billion in online ad sales, nearly one-third of all online ad revenue. “For the past two years, search has provided the only meaningful growth in the medium and is largely responsible for the buzz helping online advertising to attract new spending,” Jupiter says.
Jupiter estimates annual spending in paid search as follows.
2002 $1.1 billion
2003 $1.6 billion
2004 $2.1 billion
2005 $2.6 billion
2006 $3.1 billion
2007 $3.7 billion
2008 $4.3 billion
The growth in paid search is cannibalizing spending on impression-based online advertising, according to Jupiter. In 2003, paid search and other performance-based online advertising vehicles accounted for 39% of all online ad spending, up from 32% in 2002. During that time, impression-based (CPM) online advertising dropped from 46% of online ad spending to 41%, while online ad sponsorships dropped from 22% to 20% of spending, Jupiter estimates. In fact, the research firm speculates that the success of paid search could expand not just its share of market but the size of the online ad market itself, saying, “The ability of paid search vendors and web sites to effectively deliver local audiences could lead to accelerated growth of online advertising.”
Back...
