Online Ad Spend Beneficiaries

Last week, the Interactive Advertising Bureau reported that online ad sales rose 32% to a record $4.8 billion in the last quarter. That would put the estimated run rate at about $20-25 Billion for the year 2007.

The Interactive Advertising Bureau and PricewaterhouseCoopers announced that Internet advertising revenues for 2006 are estimated at $16.8 billion, a 34% increase over the previous revenue record of $12.5 billion in 2005.

Let’s take a quick look at the beneficiaries of the trend. Besides the obvious suspects, Google (GOOG) and Yahoo (YHOO), other beneficiaries would include the newspaper and magazine industry, which we will cover in some detail this month.

In this piece, however, my primary focus is on Adobe (ADBE), that continues to benefit from the growth of the online content publishing business, one of their primary customer segments.

Acc. to PiperJaffray analyst Gene Munster: “With both print and Internet ad spending continuing to grow on a year over year basis, we believe Adobe’s primary end markets remain strong.”

Many Adobe products are used in the design and layout of web sites, and their Flash product suite is used in designing banner ads. I am still of the opinion, that Adobe should buy a social media software company, to complete the entire authoring suite needed to support a Web 3.0 site, with not only content development tools, but also tools to support Community development.

This gap notwithstanding, the online advertising trend is definitely one that puts the wind squarely behind Adobe’s sail.