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eMarketer: US online ad spend will continue with a double digit growth and keep grabbing share from traditional media; Display ad spending will grow faster than search spending

After surpassing newspaper ad spending in 2010, online advertising growth doesn’t seem to be reaching a plateau anytime soon, according to a new report by eMarketer “US Ad Spending: Online Outshines Other Media”. eMarketer’s analysts project that US online ad spending will increase from $25.8 billion in 2010 to $40.5 in 2014. With a double digit annual growth, online advertising share of total advertising spending is expected to rise from 15.3% in 2010 to 20.5% in 2011.

According to the report, the growth in online advertising is driven by three factors. First, advertisers see online advertising as recession proof, since it carries lower risk and it is “more of a ‘sure thing’ than most traditional media.” Second, the huge growth in video inventory will increase spend among large brands. Third, self service ways to buy media, specifically display, will attract small and medium businesses.
While the growth of search is projected to continue, eMarketer also expect online display advertising spending to outpace search. The good news is that the report estimates that much of the additional display budgets are going to come out of dollars that are new to online, rather than cannibalize other online segments.

The fastest growing segment in online advertising is video, which is expected to grow by 42% on average every year until 2014. eMarketer expects video’s share out of total online spending to grow from 5.5% in 2010 to 14.1% in 2014.

Overall, eMarketer estimates that most online advertising spending remains aimed at direct response, rather than branding campaigns. However, this is gradually changing with the increase in reach and availability of online video advertising that presents a suitable alternative for brand advertisers.

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