Internet ad spend to overtake radio in 2008


Internet advertising spending will surpass radio this year, with about 9.5% of ad budgets worldwide allocated to online media, said Steve King, head of Publicis Groupe SA’s ZenithOptimedia unit, in a Bloomberg story.
“Internet has already overtaken cinema and outdoors,” King said at a presentation to analysts in Paris. “This year it will overtake radio. In a couple of years it’s going to overtake magazines as an advertising media.”

Advertising spending on the Internet will increase 26% in 2008, with the majority of the growth coming from search-related ads, according to ZenithOptimedia. The overall global ad market is estimated to rise 4.7%, King said.

Consumers spend 15% of their time on the Internet, while 9% of advertising budgets are on the Web, leaving room for growth, King said. He said rising Internet use will also drive online ad spending, with 19% of the world’s population having Web access in 2008, compared with 17% last year.

Internet ad spending will overtake magazines in 2010, King said in an interview at the conference. Radio will account for about 9% of ad budgets this year, according to the exec.

“Radio is still growing, funnily enough, because of digital,” King said.

Publicis Chief Executive Officer Maurice Levy has said digital advertising will account for 25% of the company’s sales by 2010. Digital ads accounted for 18% of Q1 revenue, up from 13% a year earlier.

To bolster its Internet business, Publicis bought online ad agency Digitas Inc. for $1.3 billion last year. The company said today it will create a unit that brings together its digital operations to boost Internet sales. David Kenny, head of Digitas, and Jack Klues, chairman of Publicis Groupe Media, will run the new organization, to be called VivaKi.

RBR observation: Remember, any ad spend on a radio station’s website, online audio stream or mobile/wireless products still goes to the bottom line. So if you were to factor all of that back to radio, it may be a different story.