Marketing research firm eMarketer has revised its estimate for U.S. Web advertising once again, and now says spending this year will represent a 4.6% decrease over last year’s online ad budget.
The agency forecasts that companies will turn out to have spent $22.4 billion on Internet-based advertising this year, primarily in the categories of search marketing, display ads and online classifieds.
Previously eMarketer also revised its online ad estimated downward in October, saying that online U.S. ad spending for the year would drop off by 2.6%. prior to that earlier revision, the company had been anticipating spending growth of 4.5% in the market.
As for what’s shifting eMarketer’s forecasts lower, senior analyst David Hallerman points to “continued softness” in key product areas that’s depressing spending on classified ads online—”formerly the third-biggest online ad format,” he points out in his report, “U.S. Advertising Spending”.
However, “the economic cycle has reached bottom—at least for the online ad industry,” Hallerman writes. Search ad spending continues steady, while banner and display ads have fallen off by a small amount.
He cautioned that finding a bottom to the decline in ad spending did not mean trending upward right away, or that marketers could expect a return to the days of double-digit spending growth. The blend of economic, societal and technological trends is not over, although total media spending will rise again starting in 2011,” Hallerman said.
Right now eMarketer expects U.S. spending on online advertising to increase by 5.5% in 2010. The main driver will be the rise of online video advertising, which Hallerman expects will become “the main form of brand advertising in the digital space.” Spending on online video will grow at yearly rates ranging from 34% to 54% until 2014, in eMarketer’s estimate, and increase from a total of 41.4 billion in 2010 to a projected $5.2 billion in 2014.
By contrast, eMarketer expects that spending on search marketing will increase at “mid-single-digit rates” next year and in 2011.
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