Internet Will Grow Through 2010

Regardless of whether or not the forecasters included Search advertising in their respective forecasts, there is no debate that:

- Internet advertising will grow double digits, likely at, or above, 15% versus 2006

- Display and search will both continue to grow

- Drivers of Internet display ad growth will be Social Media and Video

What both forecasters alluded to is that TV ad spending growth is in question because of time- and place-shifting of viewership.  If that's the case, then one of the key growth areas for Internet advertising must be video.  Whether it's YouTube or its ABC.com having ad-supported episodes of LOST or Grey's Anatomy available for free, video through broadband will be a key driver of when & where people watch video content.  Furthermore, there is a shortage of quality inventory for Internet video.  It's great that the Cable Networks are creating online video sites, but the traffic and volume just isn't there yet for supply to exceed demand.  Thus, premium ad prices will be paid for the next few years, at least.

The other area to consider is social media such as MySpace, Facebook and the like.  These properties have moved from fads to mainstream.  In 2007, their importance will grow for marketers as will the tools available for users.  Google's investment in MySpace is expected to bring a new model to the space through commerce via Google Checkout.  The ad growth for social media is expected to at least double from '06 to '07, if not more.  If you add this to video, you're getting close to 15% of total online spending.

Whether it's included or not in the forecasts, paid search will continue to grow.  Broadband growth not only means more video, but more time spent online, more money spent online, and for Google & Yahoo!, more searches performed online.  Not everyone spends in search, and certainly not spending to the maximum, particularly in Local or Video search - two other areas of growth.  Search will lead the way for spending increases in '07, continuing to drive overall online ad spending.