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Online Ad Revenue Expected To Double By 2010

Sales of online advertising is expected to more than double over the next five years, with search-engine advertising revenue expected to surpass standard display advertising.
Sales of online advertising is expected to more than double over the next five years, with search-engine advertising revenue expected to surpass standard display advertising, a market research firm said Monday.

Overall revenues are expected to reach $18.9 billion in 2010, compared with $9.3 billion at the end of 2004, JupiterResearch said.

Sponsored links and other forms of search advertising are expected to generate more revenue than display ads by 2010, as search-related revenues increase at a compound annual growth rate of 12 percent and display advertising sales rise 7 percent, the analyst firm said.

Search-engine marketing, however, is only one element of what's expected to be a growing market overall, JupterResearch said. Classified advertising, for example, is expected to increase by nearly 10 percent to $4.1 billion in 2010.

By the end of the decade, 71 percent of Internet-connected U.S. households are expected to access the web over broadband, according to Forrester Research. That's up from 31 percent in 2004.

Running parallel with the increase in broadband use will be more use of rich and streaming media by online advertisers, JupiterResearch said. Rich media, which includes video and sound, is expected to grow at a compound annual growth rate of 25 percent, reaching $3.5 billion by the end of the decade. Streaming media, on the other hand, is expected to increase at a 30 percent CAGR to $943 million.

Ad publishers are expected to see revenues from their web sites increase from direct sales and network revenue-share deals, JupiterResearch said. The revenue of ads priced on a performance basis is expected this year to surpass that of ads sold on an impression basis.

"Publishers are in a good position right now," JupiterResearch analyst David Card said in a statement.