International spending on Internet advertising is expected to rise by almost 50 percent over the next five years, according to a new report from a team of analysts tracking the global online ad market. The report, issued today by research and analytics firm Digital TV Research and entitled Online Advertising Forecasts, predicts that ad spending online will reach $143 billion dollars in 2017.
That figure is a significant rise over the anticipated figure for 2012 – $92 billion – and more than double the amount spent on Internet advertising just two years ago, which amounted to $66 billion. According to Digital TV Research, what’s driving the increased rate of growth is the changing demographics of the Internet itself; simply, the more people that get online, the more important online advertising will become. Specifically, the report says, the growth of broadband Internet worldwide plays an important role: By 2017, the number of homes expected to have broadband Internet access is estimated at 745 million across 40 countries (The report covers only 40 countries), which represents almost half (49.2 percent) of total households in those countries. In comparison, those figures for 2010 were 473 million, or 33.5 percent of total households.
The report goes on to estimate that, despite the overall leap in spending, individual cost-per-household won’t dramatically increase; author Simon Murray suggests that it may rise as little as $26 per broadband household, from 2010’s $139 per household to somewhere in the region of $165 per household.
Overall, America will continue to lead the way in Internet ad spending. Its ad spending is expected to increase by more than double by 2017, from the 2010 figure of $26 billion to $58 billion in five years’ time; overall, however, its share of the international online advertising revenue pie is anticipated to stay the same between the two periods, at 40 percent. The United Kingdom is also expected to remain in second place in the global spend table when it comes to online advertising, with its spending reaching an estimated $11.7 billion by 2017. China is expected to overtake Japan for third place at some point in 2014, with its ad revenues projected to grow from the 2010 figure of $2,600 million to $10,808 in 2017.
These figures, however, only tell part of the story – As Digital TV Research admits, the report offers numbers “for advertising expenditure via fixed broadband, and therefore do[es] not include mobile advertising.” That may skew thinking, as mobile ad spending is itself is growing significantly. Estimates from eMarketer earlier this year projected US mobile ad spending to almost double in 2012 compared with 2011 ($2.4 billion compared with $1.23 billion in the previous year), with the trend expected to continue as smartphones become more and more accepted as “the norm” by the mass market of users. Admittedly, $2.4 billion is a long way down from $92 billion, but nonetheless: An almost 100 percent increase year-on-year? That’s got to be worth paying attention to.
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