NEW YORK, NY (March 19, 2008)–eMarketer has revised its US Internet ad spend projections, estimating that advertisers will spend $25.9 billion online this year. That estimate is slightly lower than the one eMarketer put out in October 2007, which said that advertisers would spend $27.5 billion online in 2008. But it’s important to note that the lowered estimate still represents an increase of 23% over 2007 spending.

Economic woes are not expected to spell disaster for the Internet advertising industry due to a few key factors that will create spending buoyancy: measurability with a better understanding of the audience, more effective ad placements resulting in increased prices, easier purchases for advertisers and their agencies through networks and exchanges, better targeting, wooing audiences through video advertising and reaching that vital audience by following eyeballs.

Internet ad spend growth, even though less than before, will surpass all other major media. Search still leads in ad spending but the greatest growth will come from rich media and video ads. This is apparent by the acquisitions made by the portals, of shops that will bring in the non-search chunk of the market. The Big Four portals – Google, Yahoo!, MSN and AOL are becoming one-stop shops for advertisers by building up ad networks with targeting and tracking capabilities.

The EU finally approved Google’s purchase of DoubleClick, an ad serving and tracking company in June 2007. AOL purchased Adtech, a German-based ad-serving system company in May 2007 followed by the purchase of Bebo, a social network site, in March 2008. This rush of acquisitions for the portals reinforces the belief that marketers will look to the Internet increasingly for display advertising.

“When the portal is both destination and network, perhaps advertisers can get all they need without straying – or at least that’s what the Big Four hope for,” says David Hallerman, eMarketer senior analyst, and author of the new report, “US Advertising Spending: Resilience in a Dicey Economy.”

After a plus-20% increase in 2008, spending growth in 2009 will drop to about 16%. By 2012, an anticipated boom in online video advertising, combined with continued strength in more-established Internet ad categories such as paid search and classifieds, and a recovered economy, will mean spending growth greater than 20% for the first time since 2008.

eMarketer benchmarks its US online ad spending projections against the Interactive Advertising Bureau/PricewaterhouseCoopers data.

To speak to David Hallerman, senior analyst, about his analysis of the online market, reach out to eMarketer media contacts listed below.

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