Tipping the Light Fantastic

Says ClickZ:

The "tipping point" for offline ad dollars moving online may be here in the second half of 2006, according to a report by Piper Jaffray analyst Safa Rashtchy.

The speed of online advertising's growth, its benefits to offline campaigns, and recent online ad spending increases from major marketers all seem to be converging, according to Safa Rashtchy, senior research analyst at Piper Jaffray.

"We believe online media now receives about 5 percent of total marketing spending, up from 3 percent two years ago. However, online is on its way to a 10 percent share much faster then we anticipated, and we believe we are now approaching an inflection point when spending growth could accelerate," Rashtchy wrote in a newly-released report. "This point is likely to be in the second half of 2006, as the full impact of some of the recent allocation increases from major marketers becomes evident and creates a momentum that will attract more spending by advertisers who are on the sidelines now."

Rashtchy's "conservative" estimate is that online advertising will exceed $55 billion globally by 2010, a 27 percent compound annual growth rate (CAGR) over 2005. He points to large advertisers like Absolut Vodka, GM and Ford, all of which plan to spend 20 percent of their marketing budgets online next year, he said.
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The big winners in the shift of ad dollars online will be Google and Yahoo!, he said, but additional spending will be made with networks and smaller vertical sites, such as ValueClick and 24/7 Real Media. Rashtchy also predicts that agencies and intermediaries like aQuantive, Marchex and Digitas will see growing demand for their services, because of the growing complexity of search campaigns and the increasing reliance on technology in buying online advertising.