Online sector to overtake paper ads - report

The rapid growth of online advertising is expected to see the sector overtake US newspaper advertising in terms of size by 2011.

The forecast comes against a backdrop of declining advertising sales reported by newspaper groups this year in spite of continued strength in the US economy.

The findings are from a widely-watched annual research report on the media sector by Veronis SuhlerStevenson (VSS).

In the 2007 study, published today, VSS forecasts that online advertising will grow by more than 21 per cent per year to reach $62 billion (€44.95 billion) in 2011, making it bigger than newspaper advertising, which is expected to total $60 billion in 2011.

Broadcast television and cable and satellite television combined will continue to take the biggest share of advertising dollars and is forecast to reach $86 billion in 2011.

"The path of online advertising and newspaper advertising is a continuation of what we've been observing for many years, but it is finally getting to the point where the lines will cross," said James Rutherfurd, managing director at VSS.

The shift in advertising spending from traditional media to online and digital alternatives is taking place across the globe. Already, some forecasters expect newspaper advertising to be overtaken by online spending in the UK and Sweden this year.

The VSS forecasts also illustrate the lag between changes in consumers' behaviour and advertising spending.

The survey also measured the time spent on different media, and in 2007 the amount of time spent reading newspapers is expected for the first time to be overtaken by time spent online.