Display advertising future, good; video advertising, better

ADOTAS — May 26th 2009 Author — While total display ad spending online could increase 4.6% this year to $3.4 billion, the lowest growth rate recorded in the last five years, SNL Kagan analyst Liza Castaneda said the ad format is relatively undercapitalized. Once the economic crisis recedes, display ad revenues could pick up steam in 2010, growing at a 10-year compound annual growth rate of 6.6% from 2009 to 2019, she said.

Fueled by the increasing amount of professional content available online as audiences shift from traditional media outlets to the Web, online video is the fastest-growing ad format in the SNL Kagan projections, increasing at a 10-year CAGR of 26% from an estimated $978 million in 2009 to $9.9 billion in 2019.

Although difficulties in monetizing professionally produced content on the Web remain, all major media companies have, in some way or another, acknowledged undergoing changes in the way audiences consume video today.

In overall ad online spending, After reporting double-digit growth rates for more than five consecutive years, online ad spending is projected to increase by a lower 6.2% pace, to $24.6 billion in 2009, according to the projections. If Google Inc.’s first-quarter earnings are any indication, the advertising market online is set to hit its lowest revenue growth since 2003. Compared to other media segments, however, Internet ad revenues will likely fare better, in part thanks to an industrywide trend to allocate higher ad spending online.