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Study: Net ad revenue to grow to $28 billion by 2005

Within five years, the Web is expected to account for nearly 6 percent of all advertising worldwide.

Online advertising revenue is expected to reach $28 billion worldwide by 2005, dwarfing the $7 billion being spent this year, a new study says.

The Web will account for almost 6 percent of all global advertising revenue by 2005, according to a report released today by Jupiter Communications, an Internet research firm based in New York.

North America accounts for nearly 75 percent of ad revenues globally, totaling $5.4 billion this year. Europe is the second largest market with $900 million, followed by Asia with $500 million.

Jupiter predicts that Latin America will have the strongest growth rate, increasing 68 percent from 1999 to 2005.

However, the research warns, creating a global brand via the Internet is not easy.

"The challenges are commensurate with the opportunities," said Evan Neufeld, Jupiter's vice president of international research. Companies will have to adapt to increasingly fragmented material both online and offline, he said.

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The report said regionally focused media buying and the unwillingness to adopt new pricing models are factors that will stop advertisers from fully taking advantage of the Web. New advertising platforms such as wireless devices are another hurdle to cross among international markets.

The growth in advertising sales is affected by the rise in Internet users worldwide. By 2005, nearly 800 million people across the globe are expected to log on to the Web, more than double the 300 million users online today, the report said.

The findings were based on research from public financial filings and extensive interviews with online ad sellers.

Global online advertising
Current and projected online advertising revenues. Figures in millions of US dollars.
  1999 2000 2001 2002 2003 2004 2005
North America 3,509 5,390 7,444 9,768 12,237 14,623 16,913
Western Europe 434 906 1,535 2,258 3,118 4,111 5,263
Asia 225 502 880 1,375 1,922 2,556 3,324
Latin America 52 127 240 402 628 888 1,168
Australia/ New Zealand 24 74 135 208 288 373 462
Other 9 28 61 118 211 351 578
Total 4,253 7,027 10,296 14,129 18,402 22,903 27,708
Source: Jupiter Communications