• by Joe Mandese  @mp_joemandese, June 16, 2010

Online advertising is now on pace to become the world's second largest advertising medium - just behind TV - by the 2013, according to a revised global advertising report released this morning by Interpublic's Magna Global unit.

The agency, long respected as Madison Avenue's definitive source for the global ad economy, projected worldwide online ad spending would surpass the $100 billion mark, totaling $103 billion in 2015, due largely to an expansion of online advertising inventory.

The prediction comes as Magna dramatically upgrades its overall ad spending estimate, predicting that global ad spending now is on base to expand 4.2% in 2010, nearly double the 2.4% rate of growth the agency estimated in its last published estimate at the end of 2009.

"This follows 2009's downturn, which caused a contraction of 11.3% compared to 2008's totals," Magna writes in the new report. "Long term growth rates are also upgraded modestly, reflecting stronger expectations of global economic recovery through 2015."

The agency projects that the global ad economy will expand at an average annual rate of 5.1% over the next five years, an upgrade from 4.8% in its previous forecast.

Magna said video advertising - primarily TV - would remain the dominant source of advertising budgets, account for $151 billion, or more than 40% of the $377 billion global ad economy.

"Notably TV's share is lower in Europe given the pronounced role of public service broadcasters (restrictions on PSBs' advertising efforts limit TV inventory), but in all regions television is growing, up 5.4% on average through 2015," the agency noted.

Magna said the rapid expansion of online advertising would occur due to "market expansion as new advertisers have become the backbone of that medium. But newspapers will continue to grow modestly - up 1.8% in constant currency terms over the next five years - despite sustained declines in many markets. In many countries, newspapers represent a viable means of distributing content to emerging consumer classes and do not face meaningful cannibalization from online competition."

Magazines" face worse conditions with respect to online competition," Magna predicted, estimating that the print medium would fall by 0.3% each year through 2015.

Radio and out-of-home will grow on a global basis, although out-of-home "faces more favorable circumstances," according to the agency.