Research Center >> January 2008

Online Display Advertising to Grow Three Times Faster Than Traditional Media
Researchers expect Internet advertising to surpass radio in 2008.
from AICPA Custom Media Solutions

Spending on online advertising is projected to grow at nearly four times the rate of the overall advertising economy during 2008, according to new projections released earlier this month by advertising tracking firm TNS Media Intelligence. The forecast, which is based on macro economic data as it relates to the major media tracked by TNS MI, calls for online ad spending to rise 14.4 percent this year, marking the only major medium to grow at double-digit rates. TNS MI's forecast for total measured media spending calls for an overall growth rate of just 4.2 percent.

"The Internet will continue to gain share, principally at the expense of newspapers," Jon Swallen, senior vice president-research, and TNS MI's chief economist stated in the firm’s early January news release. Swallen said TNS MI tracks the share of spending by medium on a rolling two-year basis," in order to control for the biennial fluctuations associated with the Olympics and elections—events that disproportionately benefit television media." Accordingly, he said TNS MI's projections for the 2007-08 cycle indicate television and magazines will maintain their shares, while the Internet will move past radio."

Spanish language media, outdoor and cable network TV all are expected to outpace the overall growth of the measured media economy next year, while magazines, network TV, radio, business-to-business publications and newspapers all are expected to lag (see table below).
"2008 is shaping up as a year of contrasts," Swallen stated. "Aside from the continued double digit growth rate of Internet display advertising, spending gains will be driven predominately by the powerful combination of Summer Olympics and record-setting levels of political advertising. Offsetting this, a weakened economy will have a dampening effect on the broader, core
advertising market."

Not surprisingly, TNS MI's forecast calls for a disproportionate share of that growth to occur in the back half of the year, due to the build up to the November elections and the Summer Olympic Games.

TNS MI's forecast calls for a meager 3.6 percent rate of growth during the first half vs. a 4.7 percent rate during the second half of 2008. Those would also be some of the most moderate rates of growth for a so-called quadrennial year, when the advertising economy generally booms, and are especially dour when compared with relatively weak growth during 2007.

2008 Ad Growth Projections by Medium

Internet	+14.4 %
Outdoor	+5.5%
Cable Network TV	+3.6%
Network Television	+2.7%
Syndication TV	+1.3%
Radio	+0.7%
Business-to-Business Magazines	-0.1%
Newspapers	-0.9%

Source: TNS Media Intelligence