New media
Web-wise, expect '07 to get even rosier
By Heidi Dawley
Dec 19, 2006, 01:21

Looking ahead to 2007, two things will distinguish internet advertising. First, it will outpace all other media in terms of forecasted growth, and second, it will most likely outpace those forecasts as well.

If typically in media spending seems to fall short of forecasts, when it comes to the internet spending typically grows faster than even the rosiest predictions. That most likely will happen again in 2007, when spending is expected to grow as much as 30 percent.

“Internet advertising has been growing ahead of expectations just about everywhere, despite the fact that the expectations are very high,” observes Jonathan Barnard, head of publications at ZenithOptimedia.

Case in point: 2006 internet spending growth projections varied but were in the range of 20 percent. With the first three quarters now in, spending, including search, actually paced at 49 percent, according to Nielsen Monitor-Plus. While that's an extreme gap, it illustrates just how far off forecasts can be.

Just why the gap between forecasts and actual growth is interesting. One reason is that with so much hoopla over web spending growth, forecasters are inclined to err on the side of caution, lest they appear caught up in the frenzy.

But the bigger factor is that forecasters are forever behind the curve, projecting growth based on the sectors that showed the most growth that year, at a time when marketers are busy coming up with new ways to advertise on the internet.

New opportunities for advertisers spring up faster than forecasters can factor them into their forecasting equations.

Tied into that is a natural momentum of growth stemming from the disequilibrium between how much consumers use the internet and the share of media dollars that are spent on it, explains Peter Petrusky, director of the entertainment, media and communications practice at PricewaterhouseCoopers.

Media consumption patterns are changing faster than predicted, explains Petrusky, and spending is shooting ahead as advertisers are pushed to move online faster than expected to reach their target audiences as their internet use surges.

There's still a lot of catching up to do. The internet's share of media consumption is now between 15 to 20 percent, Petrusky explains, while its share of ad spending is between 4 percent and 5 percent.

The question looking into 2007 is whether this pattern will repeat itself. Some forecasters think the pace of internet advertising growth may actually slow slightly.

Group M forecasts that U.S. internet advertising will grow 14 percent in 2007, down from an expected 21 percent this year.

Why the lower growth rate? A number of reasons, including mild deterioration in U.S. consumer confidence, says Adam Smith, futures director at Group M.

Looking at other forecasts, Universal McCann’s Robert Coen, considered the dean of media forecasters, expects 15 percent growth for internet advertising, while eMarketer forecasts growth of 18.9 percent, to $19.5 billion, in 2007.

For its part, ZenithOptimedia forecasts internet advertising will grow faster in 2007 than it has in 2006. It predicts 29 percent growth in 2007, up from a forecast of 25 percent for 2006. The reason for the added acceleration is, in part, the expected surge of online video advertising. 

If 2007 follows recent years, however, all these figures will likely be revised by mid-year, and most likely upward.

Meanwhile, in online ratings for the week ended Dec. 10, the top five parent companies were Microsoft, Yahoo, Google, Time Warner and eBay. The top five brands were Yahoo, Google, MSN/Windows Live, Microsoft and AOL.

Gus Plc was the top advertiser with 10.7 million impressions, followed by NexTag at 4.85 million, Verizon at 1.75 million, HSBC Holdings at 1.74 million and Bank of America at 1.60 million impressions.

Sessions per person remained steady at 16, while domains visited per person were down 2.5 percent to 39. PC time per person was up 0.18 percent to 16 hours, 46 minutes and 9 seconds.