Commentary

Just An Online Minute... Top Line

  • by December 19, 2005

Here are a few things to think about today while you're not thinking about wrapping presents, or wrapping up business in this busy-as-hell week before the holidays.

Looks like AOL chose Google as its dance partner. Last week, published reports surfaced indicating that Google will invest in a 5 percent stake in AOL worth approximately $1 billion. The deal may be quite convoluted.  Interestingly, AOL is tracking to rack up some $1.4 billion in advertising revenue for 2005. We can't wait to see what the numbers say when earnings are reported

TNS reports online advertising revenues are up 11.5 percent year-to-date. Revenues from online advertising, excluding search, grew 11.5 percent year-over-year to $6.1 billion in the first nine months of 2005, while overall ad spending increased just 3 percent to $104.1 billion. TNS attributes the online growth to blue-chip marketers reallocating budgets online, and pure-play marketers increasing their online spending.

JupiterResearch projects the online auto ads category to grow 24 percent. Jupiter estimates that spending on search and online display advertising will grow at an annual rate of 10 percent through 2010, reaching $15 billion, with the automotive category averaging 24 percent growth each year. The travel category is also expected to average an increase of 13 percent annually. And this caveat: the telecom, media and entertainment, and finance segments account for nearly half of all online advertising.

According to Merrill Lynch seer Lauren Rich Fine, David Verklin, CEO of Carat Americas, estimates that online ad spending will grow from approximately 8 percent of Carat's clients' advertising budgets to 15 percent in about 36 months. Verklin maintains that most of the shift will be from TV to search and broadband video advertising and sponsorship, with the average media plan moving from two-thirds TV to 50 percent. Get this: Advertising Age reported that Michelin North America will allocate 10 percent of its ad budget to online efforts. The marketer will achieve this by reducing spending on event sponsorships, rather than TV advertising.

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