US Web spending on the rise

By Reuters
Los Angeles, 21 Jun 2007

Internet advertising and access spending by US consumers will rise each year by double digits on average through 2011, fuelled by high-speed connections and social networking and entertainment sites, according to a forecast released today.

PricewaterhouseCoopers' Global Entertainment and Media Outlook expects combined spending on Web advertising and fees paid by US consumers to Internet providers to reach $78.4 billion by 2011, up from $47.2 billion in 2006, a 10.7% average annual growth rate.

The US has the world's largest online ad market, projected to grow to $35.4 billion by 2011. But China will overtake the US to become the world's largest Internet territory in terms of users by 2009, the report said.

"We expect that China will accelerate in use of the Internet from where they are today - in sheer numbers [of users] they are incredible," said Joseph Rizzo, US Advisory Technology Sector Leader for PwC.

Consumer fees for access are expected to grow at a 7.1% annual rate on average to $43 billion by 2011.

Rizzo said Internet advertising was being helped by a decline in television viewing by key audiences for whom "the Internet has become an integral hub of their daily experience".

The report cited "triple-play packages" for combined Internet, telephone and television service as a driver for broadband growth in each global region, including the US, over the next five years.

Telephone company investments in infrastructure will also contribute to broadband growth, as consumers migrate from dial-up services, causing spending on dial-up access to drop by an average of 25.5% annually, the report said.

Broadband access is expected to increase to $41.4 billion, an 11.9% compound annual advance.

By 2011, the number of broadband subscribers will grow to 89 million, an average annual increase of 12.2%, the report showed.