Piper Jaffray's predictions for online ad spending keep going up, and are now expected to go beyond the $80 billion mark by 2011. Higher growth rates at the close of 2006 are one factor, but the research firm points to the people as the true driving force. As more consumers take the reins when it comes to controlling their media diets, and spend more time online and creating their own content, advertisers will continue to boost online budgets. Several prognostications are made in the firm's new "User Revolution" report, including the domination of video online, a Google dynasty, and the death of the portal.

In December, Piper Jaffray & Co.'s Internet ad revenue forecast for 2011 was at $78 billion, but today's report raises that estimate to $81.1 billion. "We have more confidence in the growth rates," of the Internet, said Safa Rashtchy, managing director, senior Internet analyst for the company. According to Rashtchy, when measuring Internet ad spending, the firm includes search advertising, display ads, text links, video advertising and e-mail, but excludes mobile and iTV.

The explosion of niche content online and the related segmentation of audiences will continue to drive online ad spending by small advertisers that otherwise cannot afford mass market vehicles. This "will actually give more power to small advertisers," Rashtchy said. Still, big brand advertisers will continue to shell out the lion's share of online ad dollars, he continued, noting consumer packaged goods and automotive advertisers will maintain their big spender positions. "Over time, there won't be much difference between the Web and the rest of the media channels….It will reflect overall advertising dollars out there," he added.

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