Monday, January 21, 2008

US Online Advertising Market to Reach $50 Billion by 2011

Yankee Group announced that the US online advertising market will reach $50.3 billion in revenue by 2011, more than doubling 2007’s revenue. The internet accounts for approximately 20% of overall media consumption in the US, but advertisers currently invest only 7.5% of their budget online. There is tremendous potential for marketplace growth as advertisers bridge this gap. By 2011, nearly 25% of all media consumption will be online, drawing 15% of the advertising dollars.

According to the recently published Yankee Group Research Report, The Cowboys Dance On…and On: 2007 Online Advertising Forecast, online advertising will grow rapidly in the coming year and beyond as the marketplace evolves. The factors driving this continued growth are:
  • Increased online audiences
  • The development of new types of advertising
  • The creation of new publisher business models that help sell interactive advertising
The internet has become the proving ground for new advertising formats, which will propel new media technologies into established print and television outlets. However, despite large online audiences and growing internet media consumption, advertisers’ online budgets continue to lag compared with traditional media. The challenge for digital media companies is to convert internet media into online advertising revenue.

Yankee Group provides some key predictions for the online advertising market, including:
  • Search will get bigger before it gets smaller.
  • Don’t say good-bye to the “dancing cowboys” animated ads yet. Low cost per thousand (CPM) “dancing cowboys” ads will continue to drive much of the revenue growth even as high-CPM brand advertisers shift their budgets online.
  • Privacy will remain a sticking point with users.
  • Social networks will merge into the media fabric (though questions remain whether social networks are the cornerstone of digital media or if they are the “better mousetrap” of the ad server business).

Steady growth requires publishers to invest in new technologies, which lead advertisers to test new ad formats and consumers. Formats that work will become more commonplace, ultimately displacing the most popular forms today.

More information on Customer Relationsip Management (CRM) can be found at

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