Coen Predicts 25% Surge In Internet Ad Spending

Leading industry forecaster Robert Coen Wednesday revised his estimate of U.S. Internet ad spending upward, but was bearish on ad spending overall.

Coen, senior vice president and director of forecasting for Universal McCann, now predicts that Internet spending, excluding search, will surge to $9.705 billion this year, marking a 25 percent increase from 2005. In the first quarter alone, online ad spending grew more than 19 percent from last year, according to Coen. Last December, he projected that online ad spending for the year would total $8.669 billion, representing a growth rate of just 10 percent.

Coen routinely excludes search from his calculations of online ad dollars; the Interactive Advertising Bureau pegs search as representing about 41 percent of online ad revenues.

Some other forecasters have predicted that online ad spending, including search, will total around $20 billion this year. PQ Media Tuesday pegged this year's total online ad spend at $19.96 billion--a 26 percent surge from 2005; TNS Media Intelligence president-CEO Steven Fredericks also recently estimated that overall Web ad spending will amount to around $20 billion. eMarketer forecasts a slightly more conservative $16.7 billion online ad spend for this year.

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Overall, Coen predicted ad spending would rise to $286.405 billion, a 5.6 percent increase from last year; last December, he forecast 5.8 percent growth. The more pessimistic outlook stems at least partly from slower-than-expected local growth in the first quarter; newspaper retail ads were down 1 percent the first three months of the year, while spot radio was down 2 percent and Yellow Pages were "flat to down," according to Coen's report. Given the softer local ad market, Coen lowered his local spending forecast 3.1 percent (to $101 billion) from the previously projected 4 percent.

Coen also reported that dot-com brands will increase ad spending to $4.625 billion this year. While that figure marks a 25 percent increase from last year's $3.7 billion, it's still down from a high of $5.597 billion in 2000.

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