July 9, 2007 | Sponsored By www.MortgageDaily.com | view on web

Ad Spending Shifting to Web

Internet advertising is expected to rise three times as fast as overall advertising through 2011.

Online ad revenue will grow from $17 billion last year to $31 billion by 2011, IDC announced. As a share of overall advertising, Web ads will go from 5.9 percent to 8.9 percent -- representing a compound annual growth rate of 13.5 percent.

The data was drawn from its own study analyzing spending for online ads and forecasting spending by advertising format, the Framingham, Mass., company said.

While the most online ad dollars will be spent on search advertising during the five-year period, IDC explained the market share represented by search will drop from 40 percent to 32 percent during the same period.

"This decline poses a strategic challenge to Google, the market leader in search advertising, since more than 99 percent of its income stems from this type of ad," the statement said.

The report indicated video is among online formats that will see an increase in popularity -- rising to the number two type of online advertising. At the same time, display ads are expect to lose market share.

IP-based mobile Internet advertising is expected to soar from $0.02 billion in 2006 to $1.12 billion by 2011 -- a market share of nearly 4 percent, IDC noted.

Online, Banking Defy Overall Ad Spending

An expected increase in overall ad spending last year prompted by congressional elections and the Olympics did not materialize, and prospects for this year are even dimmer. The outlook for online ad spending and ad spending by banks and thrifts, however, isn't so gloomy.

Spending on domestic advertising was up just 3.9 percent during 2006 and is expected to be up only 3.1 percent this year, according to a report outlining predictions made by Universal McCann Director of Forecasting Robert J. Coen last month to investment analysts and press. In dollars, total ad spending will reach $290.3 billion this year and $305.0 billion in 2008.

In 1990, total ad spending was $130.0 billion, the executive noted.

The recent slump is the result of a focus by big business on expense cutting, improvements in productivity and the buildup of cash, Coen said. In addition, uncertainty exists for the near-term business outlook.

But not all advertising is suffering.

"Online advertising and search marketing, which was virtually unthought of several years ago, have violently impacted many established media as the appeal grows for marketing tactics that are closely tied to an immediate consumer transaction," the report said. "The evolution in marketing and the new technologies is just beginning to get underway but the need for the delivery of intrusive and strong advertising purchase propositions is not likely to be easily replaced."

Internet advertising jumped 16.7 percent from the first quarter 2006 to the first quarter 2007 -- though the report suggested "a lack of
really reliable pricing facts" about this channel. "In any event, few marketing budgets except possibly for search marketing rose above their year-ago levels," the report said.

In terms of national ad campaigns, online ads are projected to jump 17.0 percent for the whole year, compared to 4.2 percent for all advertising.

And while spending on advertising for real estate has fallen 16 percent from last year, banks have boosted their spending 53 percent, Coen said.

Top 10 Mortgage Industry News Stories

Based on analysis of MortgageDaily.com traffic during past 30 days.
  1. Lehman Brothers subprime unit BNC lays off 400 people.

  2. Multi-state subprime lender Right-Away Mortgage Inc. has ended operations.

  3. Regulators in Colorado, New York and Ohio are going after mortgage companies and originators who they claim are responsible for fraud by appraisers.

  4. Florida-based subprime wholesaler The Mortgage Warehouse has quit funding loans.

  5. Oak Street Mortgage LLC -- which at its peak employed more than 700 employees, operated a branch network and generated more than $50 million in annual revenues -- has filed for bankruptcy protection.

  6. Lawmakers in Colorado, Alaska and Montana are toughening regulations as mortgage licensees across the country face disciplinary actions.

  7. Slowed production led GreenPoint Mortgage to consolidate operations and layoff 15 percent of its staff.

  8. Tumbling subprime volume has forced Washington Mutual Inc. to layoff 120 California employees.

  9. Alt-A programs with credit scores down to 620, subprime programs with credit scores down to 580 and hard money programs with credit scores below 580 were among the latest offerings being promoted by mortgage wholesalers.

  10. First Street Financial Inc., a California-based hard money lender, has closed its doors.

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