Initiative predicts 50% hike in online ad spend

The beleaguered internet industry will stage a major recovery next year with online advertising rising by nearly 50%, according to a respected advertising forecaster.

Initiative Media, the media buying giant whose clients include Unilever and Vauxhall, has predicted a 48% increase in internet advertising in 2003 following this year's crippling 16% drop.

"Online ad spending for 2002 was expected to be double 2001 levels but then the medium suffered badly along with all other media as a result of 9/11 and the general media recession," the company said in its annual advertising forecast.

"Recovery is expected in 2003 with the medium still in a healthy state. Advertisers are keen on seeing a return on their investment, especially during times of recession, and online's accountability helps ensure this," Initiative continued.

Internet advertising's growth rate will far outstrip those of other media, according to Initiative, with radio facing the slowest recovery.

Advertising across all media is predicted to grow by 4.6% next year but radio advertising would experience less than 3% growth and press advertising would be up by just 3.5%.

Initiative said press advertising would return to its 2000 levels next year.

However, most of the growth would come from magazines with newspapers recovering more slowly.

Initiative was more optimistic than Zenith Optimedia, which earlier this week said UK advertising would grow by just 2.1% next year.

But Initiative warned the UK advertising market would not return to 2000 levels for another three years.

"This five-year period of recovery will be one year longer than that following the 1990 peak in expenditure, reflecting the particularly severe nature of the recession this time round," it said.

This was partly because of the over-inflation caused by the dotcom boom in the late 90s.

"In times of recession, the media sector may experience a bigger trough than the rest of the economy as advertisers find it difficult to justify increasing their ad spends," Initiative said.

"Conversely, in a boom the media sector may experience a bigger peak as advertisers try to maintain their share of voice.

"Furthermore, in the boom of the late 90s the additional presence of dotcom advertisers pushed up the cost of media, further increasing total expenditure."