Internet advertising grew 14% in 2003

When 2003 is done and gone, the online advertising industry will have seen a dramatic 14% growth rate, increasing to $6.7 billion in revenues, driven by strength in search. Online advertising revenues would exceed $15 billion by 2008, which would represent a compounded annual growth rate of 18%.

Jupiter predicted 2003 would close with the industry bringing in $6.3 billion. The Jupiter forecast calls for ad spending in 2008 to come in at $15.8 billion, and Jupiter also pegged search as the biggest driver of growth in the short term. Search will grow at a 20% compounded annual rate, with its sister service, contextual advertising, rising at an 84% compounded annual rate to $1.4 billion by 2008. Brand-oriented advertising is expected to grow at the rate of 14%.

The analyst expects online advertising revenue to grow faster than the overall advertising market -- partly because the Internet will be stealing market share from traditional media outlets. By 2008, Piper Jaffray expects online advertising to account for nearly 6% of total ad spending, compared to the current rate of approximately 2%.