eMarketer: Online Ad Spending Due For Modest Growth

After two years of contraction, eMarketer expects online advertising will rebound in 2003, growing a modest 5 percent.

Compiling figures from nearly two dozen industry researchers, eMarketer projects online ad spending will increase from $6.4 billion this year to $6.7 billion in 2003. The forecaster points to a variety of factors for the increase, beginning with renewed economic growth expected next year. eMarketer also anticipates online media will receive a bigger piece of ad budgets, as the industry standardizes key metrics, like reach and frequency, to draw in traditional advertisers.

“The last two years were a disaster for online advertising,” said David Hallerman, an analyst at New York-based eMarketer. “The fact that 2003 is going to be a growth year, even a small one, is good news.”

The researcher forecasts the online ad industry will continue to steadily grow, hitting $8.1 million. While 27 percent more than this year’s figure, ad spending five years down the road will still fall short of the spending during the 2000 boom year.

The forecast roughly echoes those of other research outfits, which have identified 2003 as the year the online ad industry turns the corner after two tough years.

Not surprisingly, eMarketer found the bright spots of the online ad industry in the last year to be paid search, online classifieds, and rich media.

Paid listings, in particular, rocketed this year, with spending growing 144 percent to $301.9 million. Classifieds grew 90 percent, to $602.2 million; rich media added 8.6 percent, to $164.5 million.

eMarketer attributes the growth in these areas to the changed dynamics of the ad market, with marketers looking for quantifiable gains and a targeted audience. Advertisers have continued to tinker with rich media, in an attempt to mimic the branding available in TV advertising.

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