Business and Marketing

That's a compound annual growth rate of 13.7%. Offline advertising, meanwhile, will limp along at about 1% a year over the same period, according to Forrester.

Driven by the steep growth rate of online video and mobile display, online advertising will grow from this year's $19.8 billion to $37.6 billion by 2019, according to Forrester Research's “North American Online Display Advertising Forecast” released this week. That 13.7% annual growth rate compares to a mere 1% annual increase for offline advertising, though traditional channels will continue to dominate the landscape with expenditures expected to hit $239 billion in five years.

Rising investments in mobile, video, and programmatic buying are fueling online's upward trend. Four fifths of 18- to 34-year-olds watch online video monthly, as do two thirds of people between 35 and 54, Forrester reports. To improve performance of video ads, marketers are increasingly turning to more expensive targeting methods that will push CPMs for online video over the $25 mark. Online video itself will grow in excess of 20% a year, ultimately accounting for more than half (54.6%) of online display revenue by 2019.

In dollar terms, online video spend will escalate from its current $4.9 billion to $12.6 billion in the next five years. At the same time, rich media (excluding video) will edge up from $6 billion to $7.4 billion, and static display will decline from $4 billion to about $3 billion.

Mobile adoption underlies nearly all increases in the online ad arena. By 2019, 323 million smartphone and tablet owners will swell to 427 million and, as a result, mobile display advertising will grow at a compound annual rate of nearly 25%. “It is in that context that marketing leaders will have to rethink how they distribute spend across devices to match consumers' increasing consumption of content on mobile devices,” says Forrester analyst Samantha Merlivat, author of the online forecast report.

Finally, programmatic buying will increasingly become the advertising operating system of choice among marketers in the coming years. The core of the display market—performance-based impressions—will shift toward programmatic trading at a rate of 11.4% annually, according to Forrester. Premium publishers have begun to put aside their initial rejection of programmatic, with 90% of them saying they've seen their CPMs increase since they started working with exchanges and supply-side platforms. Plus, exchanges have opened their doors to the panoply of media options, such as video, social, and native.

The move to online comes not without complications, Forrester cautions. Marketers still await breakthroughs in mobile targeting and measurement. New metrics such as time spent on videos will replace traditional barometers like click-through rates. And programmatic pluses come with some minuses.

“While advertisers are keen to invest more in online display ads, the issues of ad fraud and viewability loom large,” says Merlivat.

Business Breaking News: Gaming Is Key to Marketing to Gen Z

Good news for entrepreneurs trying to serve Generation Z: Kids are already spending a ton of money on gaming.

In fact, in 2013, U.S. kids age 6 through 12 generated more than $2 billion in gaming revenue, according to a new study from consumer market research company Interpret. The research was done on behalf of the Digital Kids Summit, an event dedicated to brand owners, game developers, marketers, producers, and other professionals seeking to engage children online and through digital devices.

Over 12.8 million children in the United States own at least one smart toy, according to the findings, and on average, kids spend 12.1 hours per week gaming. They spend 3.2 hours of that time gaming on smartphones or tablets, findings showed.

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