Will Streaming Media Save Internet Advertising?

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Two recent surveys of the online advertising and entertainment industries say streaming media is poised for explosive growth and may revitalize the online ad market.

Research firm DFC Intelligence, San Diego, said that ads featuring streaming audio and video programming are expected to amount to $138 million this year. But the medium is severely underused, with just 10 percent of companies that stream content on the Internet including ads.

"Because advertising in streaming media can be a very effective way to reach a highly targeted and qualified audience, we see strong long-term growth potential for this market, particularly for cross-platform brands," said Paul Palumbo, an analyst at DFC Intelligence.

He said about 63 percent of Internet audio-casters already have used, or have the capability to use, in-stream advertising. About 24 percent of streaming video publishers have this ability, Palumbo said.

PricewaterhouseCoopers is even more optimistic about the industry. The company said the global media and entertainment industry is forecast to reach $1.2 trillion by 2005, growing by an annual compound rate of 7.2 percent.

In its study "Global Entertainment and Media Outlook: 2001-2005," PricewaterhouseCoopers stated that spending on Internet advertising and access is expected to experience double-digit growth. Overall spending in the media and entertainment industry is expected to more than double from $40 billion in 2000 to $90 billion in 2005.

"Double-digit Internet advertising and access spending growth will not only drive the U.S. market with a 14 percent CAGR [compound annual growth rate] by 2005, it will also be the fastest-growing segment globally over the next five years," said Kevin Carton, global leader of PricewaterhouseCoopers' entertainment and media practice.

Not only will streaming media revitalize the Internet advertising market, Carton added, but online retailers will "integrate their activities with catalog and brick-and-mortar outlets to incorporate the advantages of traditional retailing."

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