Online ad spending to increase 14% in 2011: Borrell Associates

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Advertising spending will show healthy growth next year, according to a forecast from research firm Borrell Associates. However, the real standout will be the online sector, which will grow nearly three times faster, thanks to targeted media and promotions.

Total ad spending will grow just under 5% in 2011 to $238.6 billion, according to Borrell Associates. Online ad spending will grow much faster, nearly 14% to $45.6 billion year-over-year, helped by local, targeted and social media. Local online advertising will grow 18% to $16.1 billion, according to Borrell.

The main driver of online growth will be targeted display advertising, according to Borrell's revised 2011 forecast. National and local advertisers will spend nearly $10.9 billion on targeted display ads, up 60% year-over-year, with national ad spending growing by about 50% while spending on local targeted efforts grows by more than double, said Borrell's forecast. E-mail advertising will also rise by a healthy 9% to $16 billion, mostly thanks to national advertisers.

“Businesses of all sizes are moving toward marketing they can control and measure by themselves. Targeted ads using social networks are one aspect of this,” said Kip Cassino, Borrell's VP of research.

Spending on paid search will drop 11.3%, due to lower prices and churn. The drop will be only partly offset by a 10% increase in spending by local advertisers, who tend to lag the national market, according to Borrell's analysis. 

Online promotions are also expected increase quickly, thanks to technologies such as smart phones. Online promotions will rise 10% to $24 billion next year, which Borrell's analysis says reflects the rise of online couponing. Spending on that segment will grow 14% to $9.1 billion. Proximity advertising is also expected to grow 11%, thanks to the rise of mobile devices that can locate nearby merchants.

“More and more, advertisers want ‘proof' that the money they spend on advertising and marketing is working,” said Cassino, via e-mail. “Coupons, and point of purchase ads -- or their online and mobile descendants -- give them that direct evidence.” 

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