Search, display to lead online ads past $60B

With strong growth in online display ads and paid search advertising, investment bank Jefferies & Co. is predicting that online advertising will surpass $60 billion by 2010. Last year, Jefferies & Co. predicted the online ad spend would reach only $54 billion by 2010.

by Kristina Knight

According to the report, by 2010 keyword search is expected to be the most popular form of online advertising, accounting for 40% of the online ad spend. Display advertising is expected to account for 21%, classified advertising (20%), referrals/lead generation (7%) and Rich media (6%) round out the top five. Sponsorship (4%) and email advertising (2%) will also stay in the mix.

The estimate is among the more optimistic for online spending. In fact, earlier this week, eMarketer predicted a slight slowing in online advertising. Though still expecting 19% growth this year, eMarketer predicts an overall slowing as online spending catches up with traditional advertising spending.

Jefferies isn't buying into the eMarketer report, however, saying that paid search will lead online growth. They expect 25% compounded annual growth in paid search through 2010, leading all ad spend categories. In 2006, search ads accounted for $14 billion across the globe; that is roughly 46% of all online ad dollars. Display and brand ads, according to the report, will show 19% compounded growth through 2010. Even with strong growth, the online ad spend is only expected to account for 10% of all U.S. advertising by the end of the decade. Current online advertising accounts for 6% of the total ad spend.

Tags: advertising forecast, online advertising, online advertising revenue, online marketing

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