eMarketer has revised its US online ad spending forecast downward, predicting 2009 spending of $22.8 billion.
Online ad spending for the first half of the year decreased by 5.3%, according to reported results from the Interactive Advertising Bureau and PricewaterhouseCoopers, eMarketer’s benchmark.
Indications—such as relatively strong Q3 results from Google—suggest an increase in search spending. Even in down years, second-half growth is stronger. eMarketer predicts a smaller second-half 2009 decrease of 2.9%, which will mean a decline of 2.9% for the year. (Note that 52% of 2009 spending will occur in the second half of the year.)
Moderate growth will pick up again in 2010 and 2011, with spending projected to rise 5.9% and 6.6%, respectively. 2012 will see double-digit growth, due to the presidential election and economic stabilization, but slightly lower rates of increase will resume in 2013.
“When you consider that the size of the online market means moderate growth rates now represent substantial additional dollars, this lesser growth—as compared with the 2003 to 2007 period—is to be expected,” said David Hallerman, eMarketer senior analyst.
“Furthermore, two key online ad formats—search and classifieds—are highly influenced by overall economic attitudes and activity,” added Mr. Hallerman. “With less shopping, people are doing fewer commercially based searches, and therefore clicking less on paid search ads. And classifieds depend on employment and real estate, both of which will likely remain soft markets for a few more years.”
Overall, many major advertisers are still looking for a way into online advertising. For example, the largest advertisers—Ad Age’s “Leading 100”—put less than 6% of their measured media budgets into online display in 2008, according to TNS Media Intelligence data.
“Internet video advertising will be the main channel for these deep-pocketed companies to increase their digital brand marketing spends,” said Mr. Hallerman. “Search advertising, too, will draw more large-company spending as their agencies continue to weave online advertising into their cross-media campaigns.”
That influx of large advertisers is one reason why video ad spending, which eMarketer expects to jump by 42.6% this year, will continue to be the major growth area. In fact, in 2009 incremental dollars to video will be second only to those going to search. By 2013 and 2014, video ads will be streaming increasingly to both computer screens and televisions, and the annual additional dollars going to video in those two years will surpass those to any other online ad format.
Banner ad spending gains will be positive after 2009 but low, except in 2012 when the presidential election will boost outlays. Classified spending will begin to recover in 2012. However, increases will stay small due to craigslist and the troubles of the newspaper industry.
eMarketer also expects an increase in the amount of non-advertising online marketing spending, especially in the world of social media. Therefore, online’s overall marketing dollars will climb faster than ad spending alone.