Web ad spending expected to double by 2011

NEW YORK (Reuters) - U.S. spending on Internet advertising will surpass $21 billion this year and double by 2011, as more money moves away from traditional media like television and newspapers, research firm eMarketer forecast on Wednesday.

EMarketer said concerns about the economy are hurting forecasts for advertising spending across the board, but said in a report that budgets for online campaigns will likely hold up better than for traditional campaigns.

"Mainly because of the credit crunch and related economic fallout, Internet ad spending will not increase as much in 2007 and 2008 as analysts previously expected," the report said.

"However, reduced spending will be tempered by advertisers buying the low-cost display advertising gobbled up by mortgage companies' shrinking marketing budgets."

Total spending this year is expected to rise by about 2.1 percent, eMarketer said, while Internet advertising is forecast to rise by 26.7 percent.

In the coming years, paid search will remain the biggest form of online advertising, accounting for about 40 percent of spending annually through 2011. Display ads like banners will generate about 20 percent of Internet ad revenues, while classified ads will contribute about 17 percent, the report said.

By 2011, it said, online spending on advertisements should reach $42 billion.

(Reporting by Paul Thomasch; Editing by Tim Dobbyn)