Internet Advertising Will Weather a Sluggish Economy

• Posted: Thursday, December 07, 2006
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• Author: pradhana
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• Filed under: Internet Advertising, Market Survey, Online Advertising

Growth in Internet ad spending will slow next year before rebounding in 2008.

By David Hallerman - Senior Analyst

The latest eMarketer estimates put total US Internet ad spending at $16.4 billion this year, a 30.8% gain over last year's $12.5 billion. The prime engine behind such strong growth is Google, whose US online advertising revenues are expected to be more than $4 billion (after subtracting traffic acquisition costs paid to network partners).

Impressive results will continue in 2007, with total US online ad spending reaching $19.5 billion. However, at 18.9%, the growth rate will clearly be more modest. This will be due to overall economic weakness, with US real GDP growth expected to fall from over 3% in 2006 to around 2% in 2007. It is, however, noteworthy that even with a softening economy, growth in online ad spending will be 17.5 percentage points higher than growth in total US ad spending (set to inch up by only 1.4% next year).

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