Report Says Online Classifieds Fueling Growth of Ad Spending

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Online classified ads will grow faster than any other form of online advertising this year in the United States., with spending projected to increase from $1.2 billion in 2002 to $2.3 billion by 2007, Jupiter Media Metrix said yesterday.


What's more, online classifieds are eating into their offline counterparts, according to the New York firm.


The results are part of a new report: "Online Advertising Through 2007: Is the Worst Over?"


"While the off-line classifieds market contracted by more than 15 percent in 2001, online classifieds registered impressive growth, increasing 38 percent to more than one billion dollars," said Marissa Gluck, Jupiter senior analyst.


Jupiter also predicted that online advertising spending in the U.S. will grow from $6.2 billion in 2002 to $15.9 billion in 2007.


Ultimately, online advertising will account for seven percent of the off-line ad market spending in the U.S. during the same period, according to Jupiter.


Factors driving the growth include increased broadband penetration, a sustained growth of the online population, media consolidation and general economic recovery, Jupiter said.


Also, though cost per thousand ad impressions-rates (CPMs) dropped between 2001 and 2002 from $2.60 to $2.50, Jupiter predicts the average CPM rate will be $4.18 by 2007.


Rapid online media consolidation and large format ads are beginning to leave marketers with fewer online advertising choices, Jupiter said in a statement. The combination of media consolidation and clutter reduction will result in fewer available ad impressions, raising the average CPM, Jupiter said.


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