Technology | Media | Telecommunications

Saturday, January 21, 2012

U.S. Online Ad Spending to Reach $62 billion by 2016


2011 will be remembered as yet another dismal year for most of the technology trade publishing sector. Connected Planet, a U.S.-based telecom industry magazine with an accomplished track-record which spanned across a century, ceased operations.

It was one more example of where advertising revenue could no longer sustain a legacy print publishing business -- even after it's been rebooted as a lower-cost online-only publication.

This phenomenon, the prospect of prolonged low profitability, will surely claim more publication closures and traditional media company victims in 2012, but the broader market outlook is apparently not as bleak -- from a top-line advertising revenue perspective.

Overall U.S. online advertising spending will growth above 20 percent again this year -- to reach nearly $40 billion, according to the latest market study by eMarketer.

Double-digit growth is forecast through 2014, when U.S. online ad spending will reach $52.8 billion. In 2016, eMarketer optimistically expects advertisers to spend an amazing $62 billion online.

"Advertiser comfort level with integrated marketing is greater than ever, and this is helping more advertisers -- and more large brands -- put a greater share of dollars online," said David Hallerman, eMarketer principal analyst.

Online has moved ahead of some traditional media -- especially print newspapers and magazines. In fact, U.S. online ad spending will exceed the total spent on print magazines and newspapers for the first time in 2012, reaching $39.5 billion (online) vs. $33.8 billion (print).

That said, spending on TV ads appears somewhat unaffected by the growth of online. As internet ad spending rises, so will TV -- although more slowly, and from a larger base.

eMarketer estimates TV advertising will attain $72 billion in U.S. ad spend by 2016 -- that's $10 billion more than will go online.

Overall, total media ad spending is forecast to grow by 6.7 percent this year to $169.5 billion, boosted by national election campaigns and gains in mobile spending. Growth will be in the 3 to 4 percent range for the remainder of the forecast period, with spending reaching nearly $200 billion by 2016.

eMarketer believes that online will be a driver of growth and will represent nearly a third of total media ad spending that year. Traditional media ad spending -- aside from a few dim bright spots, such as TV -- will stagnate during the forecast period.