Internet ad spending to jump 10% in 2011: S&P Equity Research

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Internet advertising and retail will show considerable growth next year, according to predictions from S&P Equity Research. The firm projects US online advertising revenues will rise 10% next year, with online retail spending increasing by the same amount.

Ten percent is a conservative estimate, as the US market still needs to work through a number of economic issues, including troubles in the housing and employment markets, said Scott Kessler, S&P information technology analyst. 2010 was also an unexpectedly strong year both in online retail and advertising, so year-over-year comparisons will be tougher next year than in recent years, he said.

“Double digit growth is nothing to scoff at,” especially in a stabilized economy, he said.

Online retail spending has posted double-digit increases every month during the past year. MasterCard Spending Pulse recently reported that online holiday sales rose 15.4% over last year.

Kessler also predicted that Google will launch a major local advertising initiative, citing reports of interest in Groupon.

“They've tried to crack this nut for a few years," he said. “This is one of the opportunities where Google is uniquely positioned and it's one where it hasn't succeeded yet.”

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