Online advertising set to skyrocket, study says

The next five years will witness steady growth in online advertising, with sales more than doubling from their 2004 levels, according to a new study from Jupiter Research.

Sales will reach $18.9bn by 2010, the company said Monday, up from $9.3bn at the end of 2004.

Leading the surge will be search engine marketing, which is expected to increase at a compound annual growth rate of 12 per cent, the research company said.

Sales of display ads, meanwhile, will increase at a compound annual growth rate of 7 per cent, the market researcher said.

Classified advertising is also poised to grow, according to Jupiter. That sector is expected to have a compound annual growth rate of 10 per cent, with revenue of $4.1bn in 2010.

Advertisers will be capitalising on the growing number of broadband-connected homes by spending on rich-media and streaming-media ads, Jupiter said. Rich-media spending will rise at a 25 per cent compound annual growth rate to $3.5bn, the company said, while streaming-media revenue will rise at a 30 per cent compound annual growth rate to $943m.

Also adding to Web publishers' revenue will be direct sales and network revenue-sharing deals.

"Publishers are in a good position right now," David Card, a research director with Jupiter, said in a statement. "Not only can they monetise their nonpremium inventory, but they can strategically choose the network providers they feel can generate the most yield from that inventory."

Other research has also pointed to strong online-advertising revenue. In the first quarter of 2005, Web ad sales climbed to $2.8bn, a 26 per cent boost from same period in 2004, according to an earlier report from Interactive Advertising Bureau and PricewaterhouseCoopers.

Further, Forrester Research predicted recently that online advertising would jump to $14.7bn in 2005 -- which would be an increase of 23 per cent over 2004.