On Line Advertisers To Spend $33 Billion by 2004

Ad revenues are projected to hit $33 billion worldwide by 2004 as advertisers scramble to strengthen their ad campaigns and marketing efforts via the Internet, according to the latest report by Forrester Research, Inc. [1] A full one third of that $33 billion will come from outside the United States, the firm reports.

Currently online spending in the U.S. is $2.8 billion. That figure is expected to increase to $22 billion by 2004, Forrester predicts - a 685.7 percent increase. The 2004 figure accounts for 8.1 percent of forecasted traditional ad expenditures, and far exceeds the amount predicted for magazine, yellow pages and radio spending.

According to Forrester, online advertising outside the U.S. is expected to increase from the current $502 million in 1999 to $10.8 billion in 2004 - a 2051.4 percent increase. The firm reports that foreign ad spending will expand at a faster rate due to companies starting from a small base. These companies will also have the advantage of learning from their U.S. counterparts.

Additionally, Forrester believes marketers will begin demanding performance-based deals with the onset of new return-on-investment tracking tools and the availability of ad inventory. By 2004, the firm predicts 53 percent of U.S. online spending will be based on performance.

The exploding increases in spending continue despite cries that online advertising doesn't work, company officials said.

Forrester will release the "Internet Advertising Skyrockets" report next week. The report is the result of Forrester-conducted interviews with 50 online and off-line marketers, publicly reported revenues of Internet companies, and Forrester Technographics data about consumers' online usage.