At 26.8% Growth, Online Ad Spending Slows, But Is Still Strong

eMarketer:Internet ad spending will still top $25 billion by 2010. Advertising spending on the Internet, which has enjoyed 30%-plus growth rates over the last two years, will slow slightly to 26.8% in 2006. In dollars, that 26.8% growth year over year equals $15.9 billion for 2006. And, even as spending growth subsides, the continued positive gains will push US online ad spending over $21 billion in two years and past the $25 billion mark by the end of 2010.

Any other medium's executives would be delighted to see ad spending grow at those rates. Put into perspective any commentary you might hear — and you will — that mistakenly devalues the online advertising market.

As a percentage of ad spending for total media, online ad spending is predicted to be 5.7% in 2006, climbing to 8.9% by 2010. But as more spending moves from traditional media to the Internet, online spending gains are supporting the growth of total media ad spending. In 2007, for example, total media ad spending will only hit 1.4%. But take the 15.1% Internet growth out of the equation, and total media spending drops to a flat 0.6% gain.

Paid search will continue to dominate ad spending, with a more than 40% share of each year's totals from 2005 through 2010. But as more major advertisers flock to the Internet to buy TV-style ad inventory, the share of rich media including video will double from a 9% share in 2006 to 18% in 2010. Meanwhile, display ads will drop from 21% to 17.8% over the same time span.

US Ad Spending 2006: From Pea

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