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Interactive Media Advertising Growth on Major Upswing

Interactive media’s share of worldwide advertising expenditures is expected to hit 15 percent in 2009, almost double from four years ago, and will remain the main source of growth as ad spending in traditional media continues to decline, finds a study from WPP’s GroupM, MarketingCharts writes.

Ad spending in interactive media - internet, mobile and gaming - reached 11 percent in 2007, sparked mostly by gains recorded in the U.S. and Western Europe, as well as by the increased use and availability of improved handsets, inexpensive laptops, faster broadband, and extensive Wi-Fi connections.

The survey covers 35 countries and shows digital advertising’s share of total ad investment rising from 8 percent in 2005 to 15 percent in 2009. (See table of interactive media share by global region.)

The “Interaction: Addressable, Searchable, Social and Mobile” study finds that internet advertising has been the principal source of media investment growth in western nations since 2001 as spending in traditional media has leveled off.

Among other key findings of the report:

• Almost 45 percent of 2007 interactive ad spending counted as display, a figure that is expected to fall slightly. Paid search advertising accounted for 38 percent and is expected to grow.
• Google commanded a median 86 percent share of 2007 search inquiries in the survey’s sample of 35 countries, somewhat ahead of other industry samples.
• The mean online shopping spend per user in 2007 was estimated at $471, and the only country to break the $1,000 mark was Denmark.
• The survey also revealed a particularly strong positive correlation between broadband penetration and annual online spend per individual.
• There is also strong positive correlation between the amount of broadband a country has and the internet’s share of advertising investment.
• Demographics alone will sustain growth in internet use among consumers for at least another generation, and possibly two, as those under 25 years old carry their habits into middle age and beyond.

The study also found that the amount of time consumers spent online was increasing, from a mean of 27 minutes daily in 2005 to a projected 46 minutes next year.

The report concluded that the increased time was generally not a result of consumers’ spending less time with TV, radio and print but rather carving out more time to spend online each year, or possibly multitasking, which raises the bar for advertising creativity and engagement.

“This report aims to improve advertisers’ success rate in digital marketing,” said Rob Norman, global CEO of GroupM Interaction. “There’s little doubt that interactive channels are increasingly vital to delivering reach and engagement and will only become more so in the coming years. This report sheds considerable light on how best to use these platforms and how marketers can get the most out of their investment in them.”

About the study: In addition to spending forecasts, the survey also explores interactive media use in 35 countries, including a look at consumer time spent online compared with other media, e-commerce, top websites, and related interactive activities. It also quantifies ad investment in paid search, internet display, mobile, email, and gaming.