A Surge Ahead for Online Ad Spending?

By: Steve McClellan/Adweek With big contributions from search and mobile, combined with continuing shifts in spending away from traditional ad channels by marketers, WPP's GroupM is projecting that global Internet spending will surge 11% next year to almost $65 billion and account for nearly 15% of all measured media. By comparison, global spending in the sector this year will garner a 13 percent share of measured media.

GroupM issued the findings today in a new report titled "Interaction." The study covers 36 countries and shows digital advertising's share of total ad investment rising from 3.1 percent in 2001 to 14.6 percent in 2010. It also shows that Internet advertising has been the principal source of spending growth in Western nations since 2001 as spending in traditional media has leveled off and lately declined.

In the U.S., digital advertising is expected to climb 7 percent next year to $24.4 billion, grabbing a 17 percent share of total spending, compared to 15.4 percent in 2009, according to the report. Most of the U.S. growth will be driven by search and video, which compensates for declines in Internet display advertising and sponsorships. The report also indicates that much of the U.S. growth will be fueled by sharp declines in traditional print advertising, particularly newspapers.

"For several years the focus has been on the rapid rise of Google and the implications of its auction-based pricing to advertisers and agencies," said Rob Norman, CEO of GroupM Interaction. "Today, search remains a key driver of digital marketing as advertisers compete to capture a disproportionate share of the intention that search behavior represents.

"Now, however," continued Norman, "the importance of influencing the organic listings has increased significantly, as has the focus on creating and capturing intent expressed in social media and micro-blogging actions. Search marketing is becoming intention marketing and is moving beyond results pages to activating and responding to the social graph."

Meanwhile, as spending on search and mobile surges, the growth in Internet display advertising has lost momentum over the past several years as supply has run ahead of demand, the report states. In 2010, display spending is projected to have a smaller share of total digital spending, with a 34 percent share, down from 35 percent in 2009 and 39 percent in 2006. Worldwide display advertising is expected to grow just 5 percent next year to about $20 billion. By contrast, global search advertising will soar 12 percent to approximately $25 billion, GroupM said.

Mobile advertising will rise 19 percent next year to $3.3 billion, accounting for 6 percent of all digital spending. In the U.S., the number of people accessing news on their mobile devices daily has more than doubled to 22 million and those accessing a social networking site have increased fourfold to 9 million compared to just a year ago, GroupM said, citing comScore data from March 2009. As usage grows, marketers will likely spend more in the sector, GroupM said.

-- Nielsen Business Media