GartnerG2 Says Online Advertising to Grow From $7.9 Billion in 2001 to $18.8 Billion by 2005
03/02/2002
By 2005, online advertising will be an $18.8 billion market in the United States, up from $7.9 billion in 2001, according to GartnerG2, a research service from Gartner, Inc.
While advertising growth remains flat or receding in TV, radio and print, online advertising revenue is set to grow considerably, but it is only 3 percent of the total advertising market. Therefore, GartnerG2 advises online media firms to diversify their revenue streams in order to stay viable and capture revenue growth.
GartnerG2 estimates that out of the 2,800 sites selling advertising in the United States, the top 20 sites receive 80 percent of the revenue. GartnerG2 also forecasts that year-over-year growth in online advertising will be just 15 percent by 2005, compared with 100 percent in 1998.
According to GartnerG2, there are five additional revenue streams that online media can implement to make up for the lack of advertising revenue. All five revenue areas would help online media businesses solve advertising growth challenges by expanding user bases, obtaining better demographic and targeting information from user registrations, and ultimately supporting sales to advertisers.
Those revenue streams are business services, subscriptions, licensing, e-commerce and international expansion. Business services is predicted to be the largest area for revenue growth, followed by subscriptions.
Business services are defined as customized enterprise software services, audio/video streaming, store hosting, and management and Web-site tools and services.
The challenges will be growing the user base, marketing that base to advertisers and expanding into other forms of advertising. GartnerG2 research reveals as many as 80 percent of agency requests for proposal include requests for integrated marketing proposals.
Additional information is available in the GartnerG2 report "Online Advertising: Growth Through Diversity." This report provides analysis on the key growth areas in online advertising, as well as the biggest challenges for advertising on the Internet.
GartnerG2 is a new research service from Gartner that helps business strategists guide and grow their businesses.
