Interactive Advertising Revenues to Reach US$147 Billion Globally by 2012

Interactive Advertising Revenues to Reach US$147 Billion Globally by 2012, According to The Kelsey Group’s Annual Forecast

During the forecast period, global directional advertising revenues, comprising local search, print and Internet Yellow Pages, will grow to US$41.4 billion

Princeton, NJ (Feb. 25, 2008) -- The global advertising market grew to just over US$600 billion in 2007, according to The Kelsey Group, the leading provider of research, data and strategic analysis on directional and interactive local media. The firm expects global ad revenues to grow at a compound annual growth rate (CAGR) of 2.7 percent and reach US$707 billion in 2012, propelled in large part by considerable growth in the interactive segment.

According to “The Kelsey Group’s Annual Forecast (2007-2012): Outlook for Directional and Interactive Advertising,” interactive advertising revenues will increase significantly from US$45 billion in 2007 to US$147 billion globally in 2012, representing a 23.4 percent CAGR.

“It’s no surprise that the global advertising industry is experiencing a full-scale shift to mixed-media platforms, with interactive driving a significant share of overall industry growth,” said Matt Booth, senior vice president, Interactive Local Media, The Kelsey Group. “We see Internet development—including increased subscriber/user access and broadband penetration—as a driver of both interactive advertising revenue as well as migration of traditional ad spending to new media platforms.”

Interactive advertising, which comprises search (including local search), display advertising, classifieds and other interactive ad products, grew its share of global advertising revenues from 6.1 percent in 2006 to 7.4 percent in 2007. By 2012 Kelsey Group analysts expect the interactive share of global ad spending will reach 21 percent.

During the forecast period (2007-2012), the United States will see interactive advertising revenues grow from US$22.5 billion to US$62.4 billion (22.6 percent CAGR), with interactive revenues in Canada increasing from US$1.3 billion to US$3.3 billion (21.3 percent CAGR).

The Outlook for Directional Advertising
The Kelsey Group forecasts directional advertising, which comprises local search, print Yellow Pages and Internet Yellow Pages (IYP), will grow from US$33.3 billion in 2007 to US$41.4 billion globally in 2012 (4.5 percent CAGR). The global outlook for each of the three key segments of the directional media market during the forecast period (2007-2012) is as follows:

• Local search revenues will grow from US$2.1 billion to US$6.6 billion (25.5 percent CAGR).

• Print Yellow Pages revenues will decline from US$27.5 billion to US$25.6 billion (-1.4 percent CAGR).
  
• IYP revenues will grow from US$3.7 billion to US$9.2 billion (20.1 percent CAGR).
  

“We expect printed directory revenues to decline in most global markets over the forecast period, though print will remain the most important source of leads for small businesses,” said Charles Laughlin, senior vice president and program director, The Kelsey Report®, and managing editor, The Kelsey Group. “For directory publishers to succeed, they will need to invest time, energy and resources in both channels to minimize the decline in print and maximize the opportunity online.”

During the forecast period (2007-2012), the United States will see directional advertising revenues grow from US$16.4 billion to US$18.8 billion (2.8 percent CAGR), with directional revenues in Canada increasing from US$1.4 billion to US$1.9 billion (5.8 percent CAGR). Canada is one of the markets in which The Kelsey Group expects growth in the print Yellow Pages segment, forecasting a 1.8 percent CAGR for print directories in Canada during the forecast period.