Jack goes the beanstalk
A short story (Online advertising boom) in today's Melbourne, The Age points to 26% growth in online advertising in the United States for the first six months of 2005.
The growth is in part driven by search-based keyword ads (such as those found in Google), with the following breakdown provided:
- search ads made up 40% of total online advertising revenues (the same share as the first half of 2004);
- this said, revenues for search ads increased 27% to US$2.3 billion (up from an already impressive US$1.8 billion);
- display ads (e.g. banner ads) contribute 20% of the total expenditure on online advertising; and
- classifieds bring up the rear on 18%.
Of course, even US$5.8 billion in online advertising for the first six months of 2005 pales when compared to total advertising expenditure in the United States. This doesn't surprise though; a recent speech by James Packer (Executive Chairman, PBL) made the fair point that Internet advertising is still greatly undervalued and that it will take a few years before it achieves its real value.
The article concludes by quoting David Silverman, a parter with PricewaterhouseCoopers:
"The consistent growth in overall revenues shows marketers may be shifting more of their total advertising budgets to online,"
"This is a natural development as research shows more consumers are spending a larger percentage of their media time online, while the flow of advertising dollars follows."
A few people within Wiliam were surprised by how little display ads contributed. But I have my own views as to where Internet advertising is going... and it's not banner advertising long term.
More on this later!
