Report: U.S. Web Ad Spending Will Rise to $8 Billion by 2002

Spending on Web advertising in the United States will grow from $1.5 billion this year to $3.8 billion in 2000 and $8.0 billion by the end of 2002, according to the 1998 eOverview Report.

The report, issued by eMarketer, an authority on business online, predicted a slow ramp-up of online advertising dollars. The primary barriers to online advertising are the difficulty of tracking ROI and lack of reliable measurements, the report said.

"Fortunately, these problems are being addressed with new software tools, tracking technology and database systems, as well as efforts by industry groups like the Internet Advertising Bureau, CASIE and the ANA," said eMarketer's Geoffrey Ramsey.

The report predicted an upswing in online ad spending by 2002, due to: true convergence of television and the Internet resulting in a "critical mass" of consumers online; the influx of small and medium-sized businesses advertising and the increased ability of advertisers to use the Web as a highly targeted branding, marketing and direct response tool.

But as a reality check, the report said that for 1998, online ad spending continues to be dwarfed by every media channel except farm publications. Outdoor advertising in 1998, at $1.8 billion, trumps online ad dollars by a fair margin. Online ad expenditures, at $1.5 billion, represent less than one half of one percent of total projected ad spending for 1998.

Forecasting ahead to 2002, the report projected net online ad revenues of $8.0 billion, which sounds like a bundle, but represents only 3.7 percent of the total media pie, which is expected to top $215 billion.