After bogging down in the recession, Internet advertising is regaining the momentum that has made it the decade’s most disruptive marketing machine.
The signs of an online revival are emerging even while advertising in print and broadcast remain in a slump.
Internet advertising was just about the only bright spot in the third-quarter reports of two major newspaper publishers, Gannett Co. and McClatchy Co. McClatchy’s print advertising, for instance, plunged 32% in the third quarter. Its online ad sales, on the other hand, increased 3%.
That’s because even when they buy time in other media, advertisers are realizing they need to be promoting their wares on the Internet too.
“You can draw a straight line from the time when people hear an ad on the radio or television to when they search for that company on the Internet,” said David Karnstedt, chief executive of Efficient Frontier, which helps manage ad campaigns on search engines.
These trends will give Internet advertising 19%, or nearly $87 billion, of the worldwide ad market in 2013, up from just4%, or about $18 billion, in 2004, according to PricewaterhouseCoopers and Wilkofsky Gruen Associates.
That would make the Internet the third-largest marketing medium. Television is expected to remain on top, with $168 billion, or 36% of the global ad market in 2013, up from 35% in 2004. Newspapers would still be No. 2, but their $92 billion in advertising revenue is projected to account for 20% of the global ad market, down from 28 % in 2004.
For now, though, some types of Internet advertising–real estate, travel and help-wanted, in particular–remain in the funk they fell into in the first half of the year, when U.S. ad revenue on the web fell 5%. (That was still far better than the 12% to 29% declines suffered by U.S. newspapers, radio stations and television broadcasters.)
David Hallerman, a senior analyst at eMarketer, thinks it’s too early to conclude the entire Internet advertising market is on the upswing. “It’s more like the patient had a 105-degree temperature and now it’s down to 100 degrees,” he said.
EMarketer expects Internet ad sales in the U.S. to fall by nearly 3% in the second half of this year, slightly less than in the first half. The research firm expects a 6% increase next year followed by a 7% gain in 2011.
The most compelling evidence for an online recovery is being made by Google Inc., whose search engine powers an online network that has grown from $411 million in worldwide ad revenue in 2002 to more than $22 billion annually now. The company’s ad revenue rose 7% in the third quarter, the fastest pace so far this year, and Google’s executives indicated they are gearing up for even more rapid growth in the months ahead.
