• by July 15, 2002

In today's economic climate, advertisers are challenging their agencies to be more effective with their media buys for reaching target audiences. Subsequently, television advertising is going through a paradigm shift where agencies and media buyers are focused on creating more compelling ad campaigns over interactive TV programs and applications.

In a report released today, Interactive TV Advertising: 2001-2005 U.S. Outlook & Trends, TRACE strategies reveals that interactive TV advertising is expected to account for 6.3% of total U.S. TV advertising revenues by the end of 2005.

Specifically, total U.S. revenues from interactive TV advertising (comprised of Interactive Program Guides, Video-On-Demand, Walled Gardens and Enhanced/Interactive Video) will experience average year-over-year growth of 114%, reaching $2.1 billion by the end of 2005.

Growth catalysts include an increase in spending for ads delivered over emerging video-on-demand, walled garden and virtual channel platforms.

In fact, average year-over-year revenue growth for interactive TV advertising will be strongest for walled garden and virtual channel platforms, with revenue growth averaging 238% through 2005.

The report also shows that despite possessing the weakest year-over-year revenue growth, Interactive Program Guides will still account for the largest share of total interactive TV revenue by the end of 2005, with over $794 million in revenue.

Furthermore, U.S. household penetration of interactive TV advertising will grow an average of 70% through 2005, reaching an estimated 122 million homes.