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Internet proves to be fastest-growing ad sector in 2012, says report

Internet advertising was the fastest-growing ad sector worldwide in 2012, now accounting for 18 percent of the total, according to a new report from Worldwatch Institute's Vital Signs Online service.

The report, “"Advertising Spending Continues Gradual Rebound Driven by Growth in Internet Media," finds that overall, global spending on advertising climbed 3.3 percent last year to $497.3 billion. The increase compares to a 9.6 percent drop around the world in 2009 during the global recession.

U.S. advertising expenditures grew by 4.3 percent in 2012 and are still nearly a third of the global total. The Asia Pacific region accounted for the fastest growth, with ad spending in the region increasing by 7.9 percent in 2012 (excluding Japan, which grew by 3.1 percent). Expenditures fell by 2.2 percent in Western Europe, the only region to see a decline, largely due to the ongoing Eurozone crisis.

The growth in spending on Internet ads has been driven by the expansion of social media and online video advertising. Mobile and social media now account for more than half of all advertising revenue in the United States, for example, having increased by more than 30 percent in both 2011 and 2012.

"As consumers grow overexposed to advertising, traditional forms such as television commercials, print advertising, and billboards are becoming less effective," said Shakuntala Makhijani, the study's author.

"As a result, advertisers are turning to more subtle techniques, such as promotional material on blogs, product placement and interactive advertising on social media, such as Facebook and Twitter. The distinction between advertising and media content is therefore increasingly blurred."

The report also found:

  • Newspaper advertising has dropped from nearly a third of all expenditures in 2002 to less than a fifth in 2012.
  • The expansion of television's share of global advertising has leveled off after decades of growth. It rose from 36 percent to 40 percent of advertising expenditures between 2000 and 2012.
  • Global product placement expenditures are increasing rapidly, reaching $8.2 billion in 2012, with the United States accounting for more than half of the market worldwide.
  • Retail companies account for nearly one fifth of total advertising spending, followed closely by the auto industry in the United States.