• by Paul Gough , September 25, 2003

Online ad spending will rise 14.5% to $6.9 billion in 2003, according to research released Thursday by eMarketer.

Geoff Ramsey, chief executive officer of the New York-based research and analysis company, made the prediction during his keynote address to more than 200 new-media professionals who attended the second of the two-day Forecast 2004. Ramsey said the predicted growth would be higher than the average 4.9% growth expected for all media for 2003.

Thursday's event, which was sponsored by MediaPost Communications (publishers of MediaDailyNews and MEDIA Magazine), was held in New York City. It featured experts and leading practitioners in the field of interactive advertising, who discussed issues like search and contextual marketing, rich media and regulation's impact on spam.

Ramsey's spirited opening presentation discussed trends in interactive marketing and gave a glimpse of where the industry is heading. Online ad spending rose from $700 million in the first quarter of 1999 to its high-water mark of $2.1 billion in the second quarter of 2002 before the fall and, in the most recently available data, stood at $1.7 billion in the first quarter of 2003.

There are about 140 million active online users in the United States, with the number still growing but at a slower rate, 4.5% in 2003 compared to 8.5% in 2002. The Internet has a household penetration rate of about 58%, compared to radio and TV's 98%, magazines' 84% and cable TV's 67%. The Internet's household penetration may soon reach cable TV and is already above newspapers, Ramsey said.

One of the drivers of Internet growth - the penetration of broadband - continues to grow. Data released by eMarketer shows there were 17.2 million broadband users online in March 2003. Broadband is poised for growth of at least 34% in 2003 and soon, Ramsey predicted, 22% of the nation's households will have access to broadband.