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Growth in Display Advertising on the Internet

Display advertising on the Internet carved out a 6.5 percent slice of total U.S. advertising in 2006, although spending proportions differed widely by advertiser classes to yield that average, according to TNS Media Intelligence.

Last year, Internet display stood at 5.7 percent of total U.S. ad spend. As a digital new media, Internet display takes a growing a slice of the pie that used to be devoured only by traditional analog media -- such as newspapers, magazines, broadcasting and outdoor.

"It's been growing at eight or nine tenths of a percentage point a year over the past three years," says Jon Swallen, senior VP of research at TNS MI. "That's striking because that's just for display advertising, which is a slower growing segment within Internet advertising."

The data survey doesn't include ad spend for fast-growing "paid search" such as on Google, which is analogous to non-display direct response and classified ads in analog media. Internet display covers banner ads, and encompasses some innovations such as rich media ads with moving graphics or audio.

The advertiser allocation to Internet display is distilled from a wide range of percentages from various advertiser categories. At the high end, the Health and Fitness advertiser category channeled a well-above average 26.1 percent to Internet display. At the other end of the scale, Restaurants at 0.9 percent and Apparel at 1.4 percent were well below average.

Swallen notes advertisers with information-intensive messages -- such as selling mortgages and credit cards -- are big proportional spenders on Internet display. The Financial Services category averaged a 17 percent spend on Internet display.

Below average users are image-oriented marketers such as Apparel and Non Alcoholic Beverages. There's not a lot of intricate new information to convey about a commodity soft drink, for example.

Display Internet's 6.5 percent slice came out of a $149.6 billion total U.S. advertising pie last year, which TNS MI estimates grew 4.1 percent. The Internet display category itself soared 17.3 percent in 2006 to reach $9.7 billion. That growth rate eclipsed all other categories except a 25.5 percent spike in free standing inserts (loose inserts in print publications), a smaller category on a total dollar basis.

As for traditional media sector ad spend in 2006, outdoor climbed 8.6 percent, TV rose 5.3 percent, magazines 3.8 percent and radio 0.3 percent, while newspapers fell 2.4 percent. Internet display's slice of pie gains came at the expense of a shrinking newspaper slice.

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