Internet gains share in global ad market

ZenithOptimedia, a media planning and buying firm, said the growth is being driven by smaller brands, which are turning to the Internet because it is relatively cheap and can target their markets effectively.

It forecast that Internet ad expenditure would grow 84 percent between 2005 and 2008 to $34.2 billion, an upgrade from the 76 percent it predicted three months ago.

ZenithOptimedia said the Internet would account for 12.9 percent of total ad expenditure in the UK and 10.5 percent in Sweden, the first time Internet advertising has a double-digit share anywhere in the world.

The company said it expected the spending share gap between the Internet and radio to narrow from 3.9 percentage points in 2005 to 0.7 in 2008.

"It's got a long way to go to catch up with newspapers, but certainly it looks like magazines, in the medium to long term could be on a similar level (with the Internet)," said Jonathan Barnard, head of publications at the media-buying group.

"Magazines have been losing share for many years, and obviously the Internet has only been gaining."

Overall, ZenithOptimedia predicted the global advertising spend in major media would grow 6 percent this year, 5.4 percent next year and 5.9 percent in 2008, faster than the average growth rate over the last 10 years of 5 percent.

The global above-trend growth will be driven after 2006 by China, India, Indonesia and Japan, with ad expenditure in China accelerating in the build-up to the 2008 Olympic Games in Beijing.

The mid-term elections in the United States in November will contribute to this year's growth, but growth in spending in North America and Europe will slow slightly over the three-year forecast period from the rate over the last 10 years.

The slowdown is partly the result of competition from the Internet, which is holding rates down in other media, ZenithOptimedia said.

The advertising spending used in the data was all measured at average 2005 currency rates.