Forrester Throttles Down Online Outlook

Researcher's five-year forecast dips from 20% growth to 17%

Forrester Research Tuesday (Oct. 9) forecasted a 17 percent compound annual growth for online advertising spend during the next five years, down from the 20 percent yearly increases it had earlier predicted. The Cambridge, MA-based research firm says the industry will reach $12.7 billion this year, growing to $28 billion by 2017.

Average cost-per-thousand (CPM) rates will double in the next five years to $6.64, Forrester says. It expects video promos to make up 23 percent of all online display ad spending this year while lifting to 33 percent by 2017.

During 2012, advertisers are ponying up most often for rich-media promotions ($5.2 billion), followed by text-based display ($3.5 billion), video ads ($2.9 billion) and then static promos ($1.1 billion), according to Forrester.

Digital advertising’s growth looks to be at the expense of traditional channels. Forrester said that total display advertising—including “offline” display—will decline 13 percent in the next five years.