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Online Results-Based Advertising Model

Spending on Internet advertising will account for 10 percent of total U.S. ad dollars in 2010, doubling from 5 percent in 2004, according to "The Changing Face of Advertising in the Digital Age," a new report from Parks Associates. This increase represents a CAGR of 14 percent over the next five years.

The report also finds that almost 21 percent of Internet users consider Internet advertising as the most relevant ad format for them, outscoring more traditional media formats such as newspapers, magazines, and radio.

"In the next few years, the Internet will become a mainstream ad platform and attract top dollars from advertisers," said Harry Wang, research analyst at Parks Associates. "Because the Internet is an interactive and versatile platform and offers rich consumer usage data, advertisers can improve their ad targetability and achieve better results."

Such benefits are extremely important to advertisers, who have been plagued by audience and media fragmentation and a lack of in-depth media consumption data from traditional ad formats. Many large companies with familiar brands, including Anheuser-Busch, Procter & Gamble, Verizon, and Wachovia, have been moving money out of network TV and to the Web, demonstrating advertisers' growing confidence in Internet advertising.

"Traditional media companies are fully aware of this ongoing change in the advertising industry," Wang said. "The Internet has altered the standard for the entire ad world, and traditional media have to respond by making their media platforms more interactive and results-oriented."

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