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January 09, 2007

A Cool $20 Billion: 2007 Market Size for Online Advertising Spending

posted by MR WAVETHEORY at 1/09/2007 01:51:00 PM
Total US spending on Internet advertising will reach at least $19.5 billion in 2007. This is 19% more than total spending in 2006. (Though) this rate of growth is sharply down from the 30% or more that has been the norm for several years, (and) the total US advertising spending projected to grow by 1.4% in 2007, the shift to the Internet is set to maintain its momentum in 2007.

US Online Ad Spending (billion dollars)


Online Ad Spend











Source: eMarketer, December 2006

eMarketer projects that spending on Online Video Advertising will total $775 million in 2007, which represents only 4.0% of projected US online ad spending. Although marketers are increasingly keen on including video in their online ad campaigns, they will continue to face a shortage of appropriate premium placements.

Worldwide ad spending on online social networks should top $1 billion in 2007, up from an estimated $445 million this year. Fueling this growth will be factors such as international expansion, "niche" networks, and search technology to MySpace from Google.

Digital downloading of video games will take off in 2007, and by 2010 this distribution method will account for 22% of all worldwide game software revenues. Video-on-demand (VOD) marketers may find their skills in demand for promoting these platforms.

The number of African-American and Hispanic Internet users in the US will rise to 37 million, from 35 million in 2006. This market will continue to grow faster than the total US online population for several more years.

Mobile TV took its first baby steps in 2006 with professional content. In 2007 a crucial element will be added to the mobile-TV mix: user-generated content (CGC). Given the impact the Web equivalent of this development has had in 2006, advertisers and marketers are likely to face a dizzying array of new choices.

US B2C online sales will comfortably pass the $200 billion mark in 2007, reaching a new record total, which eMarketer projects will be $223 billion. Online retail sales will account for $132 billion of this, with online travel accounting for $91 billion. A significant force driving online travel sales is the demand from relatively affluent baby boomers.

A recent study, from market research firm Compete, found that consumers were more likely to be swayed by CGC (consumer generated content) than by information coming directly from brand advertisers and marketers.

Now broadband is about value-added services and is driven by providers bundling voice, video and data together. Services such as voice over Internet protocol (VoIP) are approaching the 30% penetration range. eMarketer predicts that one in four broadband households in 2007 will subscribe to a VoIP service, rising to nearly 40% of broadband households by 2010.

More people will watch more TV and video content in the future, not less, in spite of digital video recorders (DVRs) and video-on-demand (VOD). They will just be doing so in different ways: via the TV, the Internet, the PC and their portable devices. eMarketer predicts that VOD will be in 30% of US TV households by the end of 2007 and that DVRs will be in 30% of TV households by 2009.

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Blogger Mike said...

This is an amazing information. I am so thankful that I read this good post.

5:59 AM  
Blogger aldrin james said...

I am looking for this data and I am so glad that I found it in your blog. I want to learn more about this stuff because I can get some ideas for my online advertising.

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6:00 AM  

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