Researcher Cuts Web Ad Forecast

NEW YORK While some hope the online advertising industry will thrive in an economic downturn, research firm eMarketer thinks it will suffer with the overall ad market, although less so.
 
The company cut its forecast for 2008 online ad spending 6 percent from its forecast in October. It now expects advertisers will spend $25.8 billion on Internet ads, down from $27.5 billion.
 
Still, advertisers will continue to close the gap between time spent online and media budgets, eMarketer believes.
 
“It’s going to be affected by the economy, but it’s still going to do better than other media,” said eMarketer analyst David Hallerman. “It will still have relatively healthy growth rates although not as much as before.”
 
The report comes as some signs emerge that online ad spending will suffer along with the general economy. A report from comScore last month caused some analysts to question whether Google would have a weak first quarter.
 
The researcher, which aggregates forecasts from other firms, sees the online ad industry’s recent string of 20 percent-plus annual growth coming to a halt for a few years. It expects growth to slow even more from 2009 to 2012, with annual expansion falling between 16-17 percent.
 
Attractive new venues for brand advertisers won’t mature quickly enough, eMarketer concludes. It doesn’t expect online video advertising to join search and display in powering 20 percent-plus growth rates until 2012, when spending is forecast to grow 24 percent.
 
And the current vogue for social media won’t prop up spending anytime soon because sites like Facebook and MySpace have not hit upon an effective way of turning the many eyeballs they attract into ad dollars, Hallerman said.
 
“There’s a lot of usage of the Internet that is not useful to advertisers. That includes social media,” he said.
 
EMarketer’s forecasts only account for ad spending, not initiatives like brand Web sites, applications and games not accomplished through a media buy.