Search-engine advertising set to pass banner ads

NEW YORK - Internet search advertising is set to overtake more commonplace online banner advertising by 2010, as online sales double to US$18.9 billion ($27.4 billion), up from US$9.3 billion at the end of last year, JupiterResearch says.

In an annual online advertising forecast, JupiterResearch says web search ads will probably grow faster than 12 per cent a year over the next five years, while banner displays should grow about 7 per cent.

Growth in search-based ads reflects rising advertiser confidence in the market, as well as the sophistication of software technology that interweaves advertising into many of the most popular ways that people search the internet.

"There is phenomenal momentum behind search-engine advertising," said JupiterResearch analyst Gary Stein. "The number of advertisers using search to market products continues to grow, as does the overall efficiency of the market - search engines are getting even better at making money off search-engine results pages."

JupiterResearch says search-engine marketing is only one element fuelling the growth of online advertising overall.

Classified web advertising is expected to grow nearly 10 per cent a year, reaching US$4.1 billion in 2010.

Advertisers can also take advantage of the growing number of households with high-speed, always-on internet to deliver so-called "rich media" or "streaming media" ads.

Rich media ads use audio, video and other interactive effects to woo viewers. Streaming media transmits audio or video over a network for instant listening or viewing, instead of forcing the user to download a whole song or video first.

Rich media spending is forecast to grow at a 25 per cent compound annual rate, reaching US$3.5 billion in sales, and streaming media will grow 30 per cent a year, to US$943 million by 2010.

- REUTERS