August 8, 2005

Web Search Ads to Top Banners by 2010

NEW YORK -- Internet search advertising is set to overtake more commonplace online banner advertising by 2010, as online sales double to $18.9 billion, up from $9.3 billion at the end of 2004, JupiterResearch said on Monday.

In an annual online advertising forecast, JupiterResearch said the rapid growth partly reflects how Web search ads grow faster than 12 percent per annum over the next five years while banner displays should grow only around 7 percent.

Growth in search-based ad reflects both rising advertiser confidence in the market, as well as the sophistication of software technology that interweaves advertising into many of the most popular ways that people search the Internet.

"There is phenomenal momentum behind search engine advertising," JupiterResearch analyst Gary Stein said in a statement. "The number of advertisers using search to market products continues to grow, as does the overall efficiency of the market-- search engines are getting even better at making money off search engine results pages," he said.

But search engine marketing is only one element fueling the growth of overall online advertising, JupiterResearch said.

Classified Web advertising is expected to grow at nearly 10 percent, reaching $4.1 billion in 2010, it forecast.

Advertisers can also take advantage of the growing number of households with high-speed, always-on Internet to deliver so-called "rich media" or "streaming media" ads.

Rich media ads use audio, video and other interactive effects to woo viewers. Streaming media transmits audio or video over a network for instant listening or viewing, instead of forcing the user to download a whole song or video first.

Rich media spending can grow at a 25 percent compound annual growth rate, reaching $3.5 billion in sales, and streaming media will grow at a 30 percent compound annual growth rate, to $943 million, by 2010, JupiterResearch said.