Yankee: Online ad spend to reach $50 billion

The next three years could be a watershed for online advertisers. According to a recent Yankee Group forecast, online advertising could reach $50 billion by 2011. That is a 24% annual increase.

by Kristina Knight

By 2011 about 15% of all advertising dollars will be spent online according to the report.

The increase in spending is expected to be driven by better ad targeting capabilities. Advertising on television shows or in newspapers offers some targeting because ratings services can show which demographics are watching which television show or reading newspapers. However, the ability to target online is much deeper.

Online advertisers have the ability to target within specific demographic, geographic and behavioral groups, which leads to a better ad lead. However, online targeting is still in the beginning stages which means there is more growth to be seen. This forecast predicts that as online targeting capabilities become stronger more and more advertisers will log on or increase their online ad spend.

"With internet connectivity nearly ubiquitous, online advertising growth is inevitable," said report author Daniel Taylor, senior analyst at Yankee Group. "And yet the internet is still a relatively new digital medium. Steady growth in online advertising will require publishers to invest extensively in new media and advertising product development."