Businesses may boost spending on all forms of advertising by just 5 percent next year, but online advertising is expected to post double-digit growth, thanks to a surge in local and targeted advertising, analytics and consulting firm Borrell Associates projects.
Borrell forecasts that outlays for local online ads will grow by nearly 18 percent next year, to $16.1 billion, and that spending on targeted display ads will grow by nearly 60 percent, to $10.9 billion.
"The fastest-growing segments of online advertising are the local sector, anything targeted, and everything involving social media," the company said in releasing its 2011 online advertising forecast.
Growth like that could help push total spending on online advertising up 14 percent in 2011, to $51.9 billion. But that would still represent only about 22 percent of overall spending on advertising, marketing and promotions.
With one in four cell phones now a Web-enabled smart phone, mobile ad sales are expected to snag 20 cents of every online ad dollar spent next year, Borrell said.
While advertisers continue to spend more money online, not all forms of online advertising are experiencing growth.
Borrell expects "run-of-site" display ads to continue to fall out of favor, with spending falling almost 14 percent, to $8.2 billion. Run-of-site ads — which may appear in rotation in a website’s unsold advertising slots — have been overshadowed by newer, more productive ad formats, Borrell said, and competition has pushed display unit prices down.
Lower prices and "churn" could also drive an 11 percent decline in national advertisers’ spending on paid search ads, Borrell predicts.
But e-mail advertising is expected to grow by 9 percent, to $16 billion, thanks in part to white papers that are popular with business-to-business advertisers.
Spending on streaming video ads is also expected to grow by more than 60 percent, to $5.6 billion, as inexpensive and do-it-yourself tools put the format within reach of small advertisers. Borrell expects about 40 percent of spending on streaming video ads to come from local advertisers.