EMarketer Trims Online Ad Forecast

NEW YORK For the third time in the last 12 months, Web researcher eMarketer has scaled back its estimates for online advertising in 2008 due to an uncertain economy.The firm, which produces its spending estimates in part by culling various predictions from top researchers in the space, now predicts that online ad spending in the U.S. will reach $24.9 billion, down slightly from the $25.9 billion forecast issued in March. That March figure represents a slight downgrade in expectations, as eMarketer had originally pegged 2008 expenditures at $27.5 billion last October. Also, this past May eMarketer reduced its spending estimates for social network advertising to $1.4 billion from an earlier projection of $1.6 billion. The reason for the slightly reduced enthusiasm is likely due to the shaky U.S. economy, which has left evidence of its impact on the previously red-hot digital media segment in recent lackluster earnings announcements for companies such as AOL and ValueClick. Yet, eMarketer maintains that 2008 will net out as a solid year for the medium, which should see ad revenue surge by 17.4 percent, an enviable growth rate by most standards. Still, the forecast downgrades mark a noteworthy change from recent years, when spending upgrades were the norm and the industry enjoyed annual growth ranging from 20-30 percent. It seems that even the medium is not immune to economic conditions. Earlier this year, according to the Internet Advertising Bureau and PricewaterhouseCoopers, online ad spending reached $5.8 billion, its second-highest level ever -- though that figure represented the end of a 13-quarter growth streak. However, while online advertising may feel the impact of a potential recession, it continues to benefit from a larger shift in consumer media usage and marketers' spending habits. "Even as the potent mix of a misfiring economy and consumers' changing media habits shave advertising dollars from traditional venues, such as newspapers and television, Internet ad spending will continue to grow rapidly," said eMarketer senior analyst David Hallerman.

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EMarketer Trims Online Ad Forecast

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