Online advertising to grow seven times faster than offline advertising in 2007

Zenith Optimedia forecasts global internet ad spend to grow 28.2% in 2007, while ad spend in other media grows 3.9%.

The internet’s share of total ad spend will increase from 5.8% in 2006 to 8.6% in 2009 and is headed for well over 10%

The internet will overtake outdoor this year and radio in 2009

Zenith Optimedia predicts that internet ad spends will grow 28.2% in 2007, while the rest of the market grows 3.9%. The rise of the internet has been dramatic. It has taken only eleven years to overtake two long-established media: cinema (which it overtook in 1997) and outdoor (which it overtook this year), and by 2009 it will be larger than radio.

There is still plenty of potential for growth in internet ad spends. Internet penetration is peaking at about 70% in the most mature markets, but is only 17% worldwide. Even in the developed markets, the internet receives a much lower share of ad budgets than the amount of time consumers devote to it would suggest it warrants. In 2005 consumers in the USA, Japan and the UK (the top three ad markets) spent 21.9% of their media time using the internet, yet advertisers in these three markets spent only 6.8% of their budgets online – a consumption-to-spending ratio of more than 3:1.

Zenith Optimedia expects the internet to take nearly 9% of global ad spend by 2009, but experience from the most developed markets suggests it is heading for well over 10%. The internet already attracts more than 10% of ad spend in three markets (Norway, Sweden and the UK), and by 2009 Zenith Optimedia expects it to do so in ten markets (Australia, Canada, Japan, Norway, South Korea, Sweden, Taiwan, the UK and USA). The internet has its highest share in the UK, where it will attract 13.5% of ad spend this year and 21.5% in 2009.

The Middle East is driving the rapid growth of the ‘Africa/Middle East/Rest of World’ category, thanks to oil dollars and the proliferation of Middle Eastern media. This year’s spike in oil prices has caused a corresponding peak in ad market growth, but even after the recent moderation in
prices Zenith Optimedia expects 11%-12% annual growth.

The USA, however, will still add far more ad dollar than any other market (30% of the global total), despite its more modest growth in percentage terms.

Source: Zenith Optimedia (December, 2006)