MAY 2008 SHAPING THE FUTURE OF THE NEWSPAPER2000 and 2002, due to the Internet bubble <strong>of</strong>the early mill<strong>en</strong>nium, it was back on the trackin 2003 and continued to increase with an ev<strong>en</strong>higher rate, expected to exceed 600 on theindex in the year 2009.During the Internet’s rapid growth, the alreadyestablished television segm<strong>en</strong>t has be<strong>en</strong>growing at a slower pace, especially betwe<strong>en</strong>1999 and 2003. It will be less than index 200in the year 2009, less than one-third <strong>of</strong> theonline ad index for that year.According to eMarketer and IAB/PwC research,along with increasing online ad sp<strong>en</strong>ding, theaverage annual ad sp<strong>en</strong>ding on a U.S. onlineuser is also on the rise. Sp<strong>en</strong>ding was nearly $50per user in 2001, and declined largely because<strong>of</strong> the Internet bubble. In 2007, it reached $110and is expected to increase to $199 in 2011.According to MultiMedia Intellig<strong>en</strong>ce, totalU.S. online advertising rev<strong>en</strong>ue in 2011 willreach about $35 billion, with nearly 40perc<strong>en</strong>t ($13.5 billion) made up by search.Display ads will account for 22.5 perc<strong>en</strong>t,while classified and rich media are expectedto account for 16 perc<strong>en</strong>t and 12 perc<strong>en</strong>t,respectively.Interactive marketing sp<strong>en</strong>ding in the UnitedStates will reach $60 billion in 2012, growingfrom less than $20 billion in 2007, accordingto technology and market research firmForrester Research, Inc.Online Advertising Rev<strong>en</strong>uesin China, 1998-2006US$ millions6005004003002001000Online Advertising Rev<strong>en</strong>ues (US$ millions)Increase (%)1998 1999 2000 2001 2002 2003 2004 2005 2006(%)350300250200150100Note: converted to dollars at the annual average exchange rate.From online media and advertising ag<strong>en</strong>cies, excluding search<strong>en</strong>gine marketing.Source: Shanghai iResearch Co., Ltd., “China Online AdvertisingResearch Report 2004,” June 2005© <strong>World</strong> <strong>Association</strong> <strong>of</strong> <strong>Newspapers</strong> 2007-20085008,0006,0004,0002,000Paid Search AdvertisingU.S., 2006 – 2008US$ million Paid search Annual growth %12,00029.529.0%10,00011,094.929.028.56,799.002006A 2007E 2008ESource: MAGNA Global© <strong>World</strong> <strong>Association</strong> <strong>of</strong> <strong>Newspapers</strong> 2007-2008In 2007, sp<strong>en</strong>ding was almost completelydominated by search <strong>en</strong>gine and onlinedisplay, while online video, emerging channelsand e-mail were niche groups. In 2012, search<strong>en</strong>gine and online display are still expected tobe the two largest contributors, but onlinevideo and emerging channels are growing, andare expected to continue to increase.Paid search, an important contributor to onlineadvertising, will increase from US$6.8 billionin 2006 to $11.1 billion in 2008, the mediaresearch arm <strong>of</strong> U.S.-based MAGNA Globalhas forecast. Annual growth <strong>of</strong> paid search in2007 and 2008 hit the double-digit range, with29 perc<strong>en</strong>t and 26.5 perc<strong>en</strong>t, respectively.ONLINE ADVERTISING IN CHINAIn China, online ad rev<strong>en</strong>ue is also booming.The once tiny market surged to about US$40million in 2000, with an annual growth rate <strong>of</strong>nearly 300 perc<strong>en</strong>t. In 2004, online adsp<strong>en</strong>ding exceeded $200 million, and reachedabout $500 million in 2006. Its growth,although slowing in rec<strong>en</strong>t years, is still atabout 50 perc<strong>en</strong>t per year, according toShanghai iResearch Co. Ltd.ONLINE VIDEO8,770.726.5%28.027.527.026.526.025.525.0U.S. online videoAccording to research firm eMarketer, U.S.online video advertising is a booming sector,surging from $40 million in 2001 to $4.3billion in 2011. Each year, growth is in thedouble-digits, and overall growth is more than100-fold.In terms <strong>of</strong> overall online ad sp<strong>en</strong>ding, onlinevideo ad sp<strong>en</strong>ding is growing its share, fromless than one perc<strong>en</strong>t before 2002 to nearly48
VOLUME 6 REPORT N° 2WORLD DIGITAL MEDIA TRENDSU.S. Online Video Advertising Sp<strong>en</strong>dingUS$ million %5,000Online video advertising sp<strong>en</strong>ding as % <strong>of</strong> the total online ad sp<strong>en</strong>ding124,500Online video advertising sp<strong>en</strong>ding (US$ millions)9.84,000103,5007.94,30083,0006.23,1002,50064.72,0003.62,1001,50042.41,3501,0001.81.2 1.425000.97750.640 55 85 135 225410002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Ad Sp<strong>en</strong>ding Growth 33.3% 37.5% 54.5% 58.8% 66.7% 82.2% 89.0% 74.2% 55.6% 47.6% 38.7%Note: eMarketer b<strong>en</strong>chmarks its U.S. online advertising sp<strong>en</strong>ding projections against the Interactive Advertising Bureau (IAB)/PricewaterhouseCoopers(PwC) data, for which the last full year measured was 2006; includes in-<strong>page</strong> and streaming video.Source: eMarketer, June 2007 © <strong>World</strong> <strong>Association</strong> <strong>of</strong> <strong>Newspapers</strong> 2007-2008five perc<strong>en</strong>t in 2008. It is expected to achieve a9.8 perc<strong>en</strong>t share by 2011.In 2003, ad sp<strong>en</strong>ding per U.S. online user was$1.63. This figure will exceed $12 in 2009.In 2011, sp<strong>en</strong>ding is expected to reach $23.50per user. The growth rate in 2007 and 2008 isestimated at more than 50 perc<strong>en</strong>t, and growthis forecast to remain in the double digits forthe following years.ONLINE SOCIAL NETWORKINGU.S. social networking ad sp<strong>en</strong>dingAccording to eMarketer, U.S. online socialnetworking ad sp<strong>en</strong>ding will grow fromUS$350 million in 2006 to US$2.7 billion in2011. The overall growth <strong>of</strong> more than sev<strong>en</strong>foldis at a consist<strong>en</strong>t double-digit growth rateeach year.Average U.S. Online VideoAd Sp<strong>en</strong>ding per Uservs. Average Growth, 2003 – 2011US$ Online video ad sp<strong>en</strong>ding per user (US$) %25 Average growth (%)23.5 7059.5602052.117.6143.85043.3 41.3154012.46 33.428.610308.719.35.722051.63 1.94 2.49 3.59 1002003 2004 2005 2006 2007 2008 2009 2010 2011 0Note: Age 3+; online video viewers defined as an individualwho downloads or streams video (cont<strong>en</strong>t or advertising) at leastonce a month; eMarketer b<strong>en</strong>chmarks its U.S. online advertisingsp<strong>en</strong>ding projections against the Interactive Advertising Bureau(IAB)/PricewaterhouseCoopers (PwC) data, for which the last full yearmeasured was 2006; online video includes in-<strong>page</strong> and streaming video.Source: eMarketer, June 2007© <strong>World</strong> <strong>Association</strong> <strong>of</strong> <strong>Newspapers</strong> 2007-2008US$ million3,0002,5002,0001,5001,0005000U.S. Online Social NetworkAd Sp<strong>en</strong>ding, 2006-2011350163%92070%1,56029%2,020Source: eMarketer, Dec. 2007© <strong>World</strong> <strong>Association</strong> <strong>of</strong> <strong>Newspapers</strong> 2007-200819%2,40013%2,7002006 2007 2008 2009 2010 201149