• by Laurie Sullivan  @lauriesullivan, October 9, 2012

Marketers will spend about 17% more annually for interactive display marketing in the United States between 2012 and 2017, while European investments will grow a bit more slowly, according to a Forrester Research report released Tuesday.

Analysts attribute several factors to the double-digit growth, like the rise of programmatic buying technologies, along with rich media and video options. Forrester Analyst Joanna O'Connell explains that U.S. interactive display media will grow from $12.7 billion in 2012 to $28 billion in 2017, an average compound annual growth rate (CAGR) of 17%, compared with offline at 1.1%.

The fastest growth will come from cable TV at 4.1%. Radio, newspapers, and Yellow Pages will decline. Forrester also trimmed the U.S. display forecast by about 13% in the next five years, attributing some of the decline to a shift to less-expensive social media impressions, which weakens portals such as MSN and Yahoo.

Emerging ad types and pricing models will get a bigger share of budgets by 2017, according to the report. Program media, fueled by audience targeting, will offer the best performance. As marketers compete for similar audience segments and number of bids increase, average CPM prices of exchange impressions will rise from $3.17 to $6.64 by 2017.

Video will rise from 23% of online display budgets in 2012 to 33% in 2017. More expensive CPM placements, such as full-page placements and long-form video, will replace older formats, such as buttons and other small banners.

How will marketers justify higher CPM?

O'Connell believes that this will occur partially through better data and analytics. The best way to identify the most valuable impressions to ensure a higher return on investment points to knowing your current and future customers and their behaviors and using the correct metrics.

Internal business processes will change, too. Marketers will become system integrators by thinking about budgeting decisions within the context of an "integrated system" that drives positive advancements and returns on digital marketing campaigns, rather than looking at each channel, creative, or technology expenditure in silos. They will make IT decisions themselves.

Forrester analysts also believe that digital media buyers will give up power to internal groups, such as agency trading desks and vendor partners, either managed by technical groups or by the client. O'Connell points out that Team Detroit, a mix of agencies and vendors, already does this for Ford, while other companies, like Allstate Insurance, have just begun to make the change.