Behind the decline in online advertising
Numerous forecasters predicted that internet advertising would continue to grow throughout the worst recession in recent memory, but now they’ve revised their predictions to say online spending will fall this year for the first time since 2002. Still, its losses will be much lower than other media, and next year growth is expected to pick up again.
That’s according to a revised forecast issued earlier this week by research firm eMarketer, which predicts that online ad revenue will fall 2.9 percent this year, to $22.8 billion, before rising 5.9 percent next year, to $24.1 billion. Online is suffering from comparisons to a strong 2008, the best ever in terms of web ad spending, hitting $23.4 billion.
Growth will be driven by search, still the largest category, but also video, which will see the biggest year-to-year increases over the next five years as deep-pocketed advertisers shift their money toward that format. David Hallerman, senior analyst at eMarketer, talks to Media Life about why he changed his forecast, why third and fourth quarter will see slower declines, and why classifieds are hurting offline and online.
The forecast changed the most recent one before was in April and at that point we didn’t have the second quarter results from any large portals and we’ve also since got the third quarter results from Google, as well as the first half of the year historical data from PricewaterhouseCoopers. So those are some factors why the overall ad spending number will be down compared to before.
In April it was up 4.5 percent for the U.S for this year, and now the projection is for it to be down 2.9 percent.
But when you consider that the first half of the year was down 5.3 percent, down 2.9 percent for the year represents the likelihood that the market has reached bottom and has started to slowly climb its way back, at least more so than other media.
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