HOLLYWOOD — Despite past predictions of a softening market, there may be a fruitful future for Internet ads.
Online ad revenue is expected to reach $16.5 billion by 2005, making the Internet the fourth largest ad medium after broadcast television, radio and newspapers, according to a survey released Wednesday by Web research firm Jupiter Communications Inc.
Jupiter projects online ad revenues to grow at an annual rate of 30%, ultimately representing almost 8% of the total advertising market.
The survey found that marketers plan to increase Internet advertising spending at a higher rate than any other medium. Approximately 73% of advertisers said they would increase their online spending in the next 12 months, in comparison to the 43% who said that they would increase magazine spending and the 37% who plan to increase their cable 1TV budget.
However, more ads mean more competition for consumer eyeballs. The survey predicts that by 2005, Netizens will be exposed to 950 online ads per day, more than doubling from the 440 ads in 1999. This, says Jupiter, will force advertisers to develop innovative methods of online marketing via email, viral campaigns, affiliate networks and sponsorship, in addition to banner ads.
“With a renewed focus on accountability and efficiency, marketers turn toward more quantifiable media, such as the Internet,” said Patrick Keane, Jupiter’s director and senior analyst. “The battle within this cluttered environment will be to capture the attention of online users.”