US ad market up 3.9% in 2005, 6.6% in 2006

According to Kagan Research, the 2005 advertising market turned out to be a disappointment, with total ad revenue growing only 3.9% to $240 bln. Kagan expects 2006 to be much more robust, fueled in part by the Olympics and elections, with growth of 6.6% to $255.7 bln. Kagan anticipates a CAGR of 5.1% for ad revenues over the next decade, reaching $400 bln by 2015. Local advertising growth is expected to be less strong at 2.5% annually, reaching $120 bln 10 years out.

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The Outdoor Advertising industry has achieved phenomenal growth, rising at a compound annual growth rate of 14%/year over the last 25 years from just $260 mln in 1970 to $6.3 bln in 2005. This has been done in large part by finding new venues such as transit signs, benches, auditoriums, etc. Satellite radio, interactive TV and the Internet posted the most robust growth rates in 2005, up 235%, 116% and 24% respectively. The Internet has posted the strongest growth rate over the past decade, up an average 57% per year over the past ten years.