Online Ads and Shopping Continue Upward Curve

18 January 2005

Online adspend in the US could top $10 billion (€7.6bn, £5.3bn) this year.

Analysts say demand for online video ads by big names such as Ford and Colgate-Palmolive and a rise in text ads on search engines Google and Yahoo! could contribute to a 20% increase in the market in 2005.

And most forecasters agree it brings nothing but bad news to traditional media such as TV and newspapers.

Researcher eMarketer says online ads will constitute 4% of the whole US advertising market, up from 3.5% in 2004. Many more consumers are now switching to high speed internet connections. This, coupled with far bigger audiences than even the highest rated TV shows can muster, make video ads an attractive option, despite online media costs which can be up to $300k for 24 hours.

Investment banker Goldman Sachs says entertainment, drug and auto ads are among the fastest growing sector of online advertising, which is becoming a "permanent component" of major marketing campaigns.

The love affair with the internet is not confined to the US, however, as online shopping figures in Britain testify. Researcher Interactive Retail Media Group says consumers spent £3 billion online in 2004 and predicts e-retailing will break the £5bn barrier by the end of this year.

Adds Richard Hyman, chairman of Verdict retail consultancy: "This is the fastest-growing retail channel - faster than out-of-town, the high street, shopping centres. The high street in any case now accounts for less than 50 per cent of retail sales and I would see this Christmas as one where the high street has lost out a little to the internet."

Data sourced USA Today Online and Financial Times Online; additional content by WARC staff