S&P sees bright future for online advertising

By Exclusive Concepts Blog Team

Standard & Poor’s is optimistic about online advertising in the coming years:

S&P expects that online ad growth in 2006 will exceed 20%, reflecting the continued strength of both search and brand advertising. Marketers appear to be gaining confidence in the Internet’s ability to reach consumers. For example, Yahoo! [YHOO ] (BBB-/Stable/–) indicated that its brand-marketing revenue from the top 200 U.S. brand advertisers grew more than 45% in second-quarter 2005, and Ford Motor [F ] has allocated about 15% of its marketing budget to online initiatives. Furthermore, some marketers have begun to incorporate search advertising as part of their overall branding campaigns, which could spur more online-ad spending.

All these events suggest that online advertising will continue to experience above-average growth over the medium term. Even assuming that growth decelerates somewhat, Internet advertising is likely to exceed magazine advertising in 2006. Spending on Internet ads could potentially surpass spending on radio in 2008, assuming 1% to 2% growth in radio ad spending and a minimal contribution from satellite radio.

Read the full article about the advertising forecast for TV, movies, radio and online here.