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eMarketer Slashes Web Revenue Forecast

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NEW YORK Growth in online ad spending has significantly decelerated, leading industry analyst firm eMarketer to lower its revenue expectations for 2009.

Online ad spending will climb by 8.9 percent next year, from $23.6 billion to $25.7 billion, eMarketer says. Back in August, just prior to Wall Street’s meltdown, eMarketer predicted that spending would surge by 14 percent in 2009. But the economy is now taking its toll on all segments of media.

The good news is that spending growth should gradually improve over the next several years according to the firm -- +10.9 percent in 2010 and +13.5 percent in 2013 -- but those growth figures are also lower than eMarketer recently forecast, as the ad recovery is now expected to take longer than originally believed.

As it has in recent years, search remains the medium’s strong spot, and the ROI-heavy sector should take an even larger proportion of ad dollars over the next few years as display advertising struggles to match the exponential growth of previous years. In 2009 eMarketer predicts that search will surge by 14.9 percent to $12.3 billion, though that’s down considerably from this year’s growth rate of 21.4 percent.

Yet search will see its overall share of online ad dollars swell from 45 percent this year to 48 percent in 2009 as other segments slow down. For example, display advertising is expected to grow by just 3.9 percent this year and 6.6 percent next year – when it will reach $4.9 billion.

The strongest segment in terms of raw growth is online video advertising, which eMarketer says will surge by 45 percent in 2009, albeit from a much smaller base ($587 million in 2008 to $850 million in 2009). And even that 45 percent growth figure indicates a slowdown, as online video ad spending soared by 81 percent this year, based on eMarketer’s report.