Jupiter: Global Online Ad Spending to Reach $28 Billion

Total spending on online advertising will soar to $28 billion by 2005 — up
from $4.3 billion in 1999 — but big challenges face online marketers
seeking to exploit the medium’s potential, according to a new report issued
by Jupiter Communications.

Those hurdles include a continued reliance on regionally-oriented media
buying, a lack of adoption of innovative online ad models, and integration
issues.

Although it appears that marketing — and online marketing in particular —
is growing increasingly global, with opportunities for multi-national
brands to craft integrated marketing plans across international markets,
most marketers don’t plan that way now and most agencies aren’t organized
to operate that way.

Rather than being driven by any particular innovation in online
advertising, the growth predicted by Jupiter will mostly be fueled by the
increase in the size of the global online population. The company predicts
the number of people online will grow from 300 million users to 800 million
users in 2005. In fact, the report contends that most companies are
ill-prepared to take advantage of the opportunities.

“While the numbers paint a compelling picture for the Web as a global
channel for advertisers, there are significant hurdles to making the
Internet a superior global communication tool,” said Evan Neufeld, vice
president of international research for Jupiter.

“The challenges are commensurate with the opportunities. Brands that can
innovate and adapt to the increasingly fragmented media mix online and
off-line, realize and overcome traditional inefficiencies in the way in
which they communicate with consumers globally will become global winners,
as will media companies and agencies that partner with them to achieve
these ends. There will be few prizes for second place in the race to be a
globally effective brand.”

Neufeld cites differences between the US and European markets as an example
of how marketers have failed to adopt a global strategy. While online ad
spending totaled $3.5 billion in North America in 1999, the world’s second
largest market, Western Europe, got nearly nine times fewer dollars — $0.4
billion. Asia was next, with only $0.2 billion in online ad spending.

Of course, this relative lack of spending in smaller markets means there’s
more growth potential. Out of all the major markets, Jupiter predicts that
Latin America will experience the strongest growth rate — 68 percent.

Integration across media will also become a big issue, according to
Jupiter. The company says players are already failing to integrate
campaigns across existing media, and the problem will only worsen as new
wireless and interactive TV platforms proliferate.

Jupiter came up with its current figures by looking at public financial
filings and interviewing online ad sellers. In putting together its
predictions, the company considered the following:
current online penetration and usage behavior, future size of audience,
Internet commerce potential, off-line advertising spending, media
consumption, and supply-side growth expectations.

Global Online Advertising, 1999-2005 (in millions of US dollars)

Source: Jupiter Internet Advertising Model