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Online advertising to reach $31 billion in 2011

June 8, 2011 | 12:23 pm

As people spend an increasing amount of their time online, advertisers are swiftly following.

The U.S. online advertising market is expected to reach $31.3 billion this year, according to a new forecast from market researcher eMarketer. Spending is projected to grow by 20% from 2010 when advertisers invested about $26 million in online marketing. EMarketer_US_Online_Display_and_Search_Ad_Spending_2010-2015_128184

"As consumers continue to increase their time spent online, and as the resurgent economy continues to bolster ad budgets, we're going to continue to see an influx of dollars toward the Internet," eMarketer analyst David Hallerman said in a statement.

The increase is fueled primarily by significant gains in spending on display advertising, a category that includes banners, online video and sponsorships. U.S. advertisers are expected to spend $12.33 billion on online display ads this year -- a gain of nearly 25% from a year earlier. Video advertising is the fastest growing online ad format. 

"High inventory and lower pricing have made banner and video ads increasingly attractive formats for brand advertisers, many of which have seen their online ad budgets grow during the past year," Hallerman asaid.

These projected gains in display ad spending are narrowing the traditional gap between these types of ads and those placed next to Internet search results. Spending on search ads will reach $14.38 billion this year, up 20% from a year ago.

Online viewing has been growing fast, but is still dwarfed by the amount of time people spend in front of the TV.

The average American watched 34 hours and 39 minutes of TV a week, according to Nielsen Research -- with the most ardent viewers over the age of 65. By contrast, 143.9 million Americans went online to check out video in January and invested about 4 hours and 39 minutes a month watching on their PCs and laptops.

Online advertising has yet to catch up to spending on traditional platforms. TV advertising represented more than half of the $131 billion spent in the U.S. on overall advertising last year, a 6.5% increase from 2009, according to Kantar Media, which monitors ad spending.

-- Dawn C. Chmielewski

Image: U.S. Online Search and Display Advertising graph. Soruce: eMarketer

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