Online to grab 15% of total ad spend next year

Wed Sep 23 2009, 18:38 PM

The internet will account for 15% of global ad spending in 2010, hitting USD65bn annually as advertisers embrace search and mobile advertising at the expense of traditional media, according to a forecast from ad firm GroupM. The rise would continue the online migration of ad dollars, a trend that has accelerated since 2001, when the internet accounted for just 3.1% of total ad spend.

Spend on mobile web ads will see the biggest rise within digital formats, increasing by 19% to hit USD3.3bn in 2010 and account for 6% of all internet advertising. GroupM attributes much of the increase in mobile ad spending to the popularity of Apple’s iPhone. However, mobile still constitutes a comparatively small part of total digital ad spend and advertisers have yet to fully acclimatise to the growth in mobile internet use. 

Search advertising will remain popular, increasing its share of digital ad spend by 12% to reach around USD25bn worldwide. GroupM says search will account for 43% of all online advertising by 2010, up from 38% in 2006. “Search remains a key driver of digital marketing as advertisers compete to capture a disproportionate share of the intention that search behaviour represents,” says GroupM Interaction CEO Rob Norman. 

In contrast, display ad growth is starting to stagnate, with GroupM expecting display ad spend to rise just 5% globally to USD20bn next year. The trend is more marked in the US, where GroupM predicts display advertising will account for 34% of total spend on digital ads next year, a decline of one percentage point. The US is often considered a weathervane for advertising trends and GroupM says that the disparity between US figures and global ad spend is partly down to areas such as Asia Pacific being “behind the curve”. 

Martin Sorrell, CEO of GroupM parent WPP, recently told the Wall Street Journal that digital marketing budgets lag behind his own group’s spending on internet advertising due to “natural conservatism, resistance to change and inability to adapt to change”. He says he expects digital ad budgets to account for 20% of total ad spend in five years, by which time WPP will be buying around 30% of its ad space online.