Forecast knocks down 2012 digital outlook

Yet another advertising forecast for 2012 has been downgraded, but this time it’s not a reflection of the sputtering economy.

EMarketer, the online forecasting firm, has lowered its outlook for online ad spending this year from 17.7 percent growth to 16.6 percent.

That’s still a robust number by any standards, and especially right now, when so many media are growing only by low-single-digit percentages or even shrinking.

The decreased forecast was prompted by two main factors, the first-half ad spending numbers and the continued maturation of the marketplace.

“Based on the Interactive Advertising Bureau/PricewaterhouseCoopers data for the first two quarters of 2012, and because the digital ad spending market is approaching maturity faster than expected, eMarketer has lowered the projected rate of increase for US digital ad spending slightly from its earlier forecast,” says the report.

Total online revenue this year will hit $37.31 billion, eMarketer predicts, up from $31.99 billion last year.

The pace of spending growth will slow each of the next five years. This happens naturally with any form of new media, as comparisons to previous years grow tougher.

Next year growth will be 13.9 percent. By 2016, growth will slow to just 6.4 percent. Spending will hit $55.25 billion.

Google will continue to be the dominant online ad space. It will account for 41.3 percent of total digital ad revenue this year, with $15.41 billion in spending.

But Google’s first-half ad revenue is part of why eMarketer slashed its projections. Though spending still grew, it did not grow as fast as analysts had predicted.

“Google will see slightly slower growth than eMarketer estimated earlier this year, as the company’s ad revenues for the first two quarters of 2012 were a bit lower than expected,” says the forecast.

“Despite this factor, Google’s growth will reach 20 percent in 2012 and remain in the double digits through 2016.”

By 2014, Google will account for $20 billion spending.

To put in perspective just how dominant the company is, digital revenue at the three other biggest online ad destinations, Yahoo!, Microsoft and Facebook, will average just over $3 billion apiece.

The top ad format will remain search, though it will see its share of total digital spending decline this year for the first time in years as other formats gain popularity.

This year search’s share of advertising will be 47.1 percent; that will dip to 44.2 percent within four years.

Meanwhile display, which includes rich media, sponsorships and online video, will see its share rise from 40.2 percent this year to 45.6 percent in 2016.
 

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