This outlook echoes several recent research reports that have tempered the gloomy outlooks of some Wall Street analysts, who have warned of bad times ahead. As cash-strapped dot-coms rein in their advertising budgets, analysts have said that ad revenue growth for many Web companies could suffer.
Yahoo was held as a benchmark for this trend; however, the leading portal surprised analysts with a solid earnings report and strong revenue growth for the second quarter.
"Despite the doom-and-gloom predictions of the Internet space, (this) actually helps online advertising because it disciplines and focuses ad strategies and spending," said Marissa Gluck, a Jupiter Communications analyst and author of the report.
According to the survey released today by the Internet research firm, online ad revenues are expected to reach $16.5 billion by 2005.
The number of Internet ads a Net surfer will be exposed to is also expected to increase. The study found that by 2005, the average person could view 950 marketing messages a day online.
The challenge, Jupiter maintains, is for businesses to employ more efficient message delivery to stay one step ahead of competitors in the crowded market. Ways to do this could include sending ads over email or cutting deals with affiliate networks for sponsorships--in addition to using traditional banner advertising.
"Over the past two years, we have seen overheated offline advertising spending by access, commerce and content companies that were willing--even eager--to pay hundreds of dollars to acquire new customers, seemingly without regard for the lifetime value of the customers," said Jupiter director and senior analyst Patrick Keane.
The study found that marketers plan to increase ad spending online at a higher rate than on any other medium. Approximately 73 percent of advertisers said they would increase Net spending in the next 12 months, in contrast to the 43 percent that said they would increase magazine spending and the 37 percent that plan to increase spending for cable TV advertising.
Altogether, Net advertising will represent close to 8 percent of the total ad market in the United States by 2005, the study said.