Nearly 100 Million HH Online By '16, Mobile Ads To Grow 60%

Person-on-Computer

Paving the way for more online activity, 99.4 million U.S. households will be online by the end of 2016 -- of which 97.9 million will have broadband services -- according to a new forecast from Interpublic Group's Magna Global. 

As of the end of the fourth quarter of 2010, about 84.7 million homes -- or 71.5% of the total -- were online, while 90% of these homes accessed the Web using broadband services.

Magna now predicts that 61.9 million U.S. homes -- or 50% of the total -- will subscribe to DVR services by the end of 2016, which would be up from 39.2 million -- 33.5% -- at the end of last year.

By 2016, Magna expects that Video On Demand -- which it now defines as all Over-the-Top services -- will reach 70.1 million households, or about 57% of all TV-viewing households). This compares with 52.5 million VOD households -- 45% -- at the end of the fourth quarter of 2010.

Overall, the "increase in broadband access and DVR/VOD penetration means consumers are still watching TV. They're just doing it differently," says Alex Feldman, a manager at Magna Global. "The Web is supplementing traditional TV and at the moment, we're not seeing the Web and DVRs take away from the sheer volume of traditional TV consumption."

For a number of reasons, Feldman insists that DVR and VOD do not threaten the Web.

"Pros for DVR usage include size and quality of the screen and more limited premium content options available online," he says. "The pros for Web viewing include limits to DVR box storage space and consumer's ability to catch up with content he or she may have forgotten to record."

Last week, Magna predicted that U.S. advertising sales would increase 1.8% in 2011 -- less than last year's 3.2%.

Meanwhile, online media spending will show an 18.7% gain this year, Magna said. Earlier this year, Magna said it expected digital display advertising to grow by 11.6% on a normalized basis during the year.

Standouts should include mobile advertising, which Magna saw soar by 60.1%, along with paid search, which it estimates will grow 11.1% this year.

Overall, however, Magna suggested that growth remains hampered by "continuing weakness in unemployment ... the absence of a meaningful pick-up in the overall economy and constrained deployments of capital among businesses of all kinds."

 

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