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will rise 7% this year
Study: $7.6B in '01, $10.3B in '02, $23B in '05
By Marty Beard
Lagging sales and the steep downturn in the economy may have dashed some of the more outlandish expectations for online ad spending, yet the web remains a vital ad environment.
While most other media are seeing flat to negative growth in 2001, online advertising will increase a very healthy 7 percent this year, hitting $7.6 billion, according to the latest figures from research firm eMarketer.
The firm further predicts that online ad expenditures will hit $10.3 billion in 2002 and $23 billion by 2005.
"We’re not going to see the explosive growth that we've seen in the past couple of years, but that doesn’t mean it’s a dead carcass. It just means that growth is now more realistic," says Jonathan Jackson, a senior analyst with eMarketer.
EMarketer is almost alone among research firms in not having downgraded its projections for this year from its initial projections in April.
Jupiter Media Metrix, for one, has slashed its expectations for the year by almost 22 percent, to $5.7 billion from $7.3 billion.
But Jackson believes other forecasters are overreacting to the overall slump in ad spending.
"Online advertising has been unfairly picked on as a bad boy, if you will," he says.
"Advertising across the board has been down--TV, radio, print, newspaper and so forth. Online advertising is really not doing as badly as everyone seems to think."
EMarketer comes up with its forecasts from data compiled by other analysts, with its projections falling right in the middle.
At the low end, the Myers Group is projecting $4.7 billion in spending this year, a significant decline from its earlier forecasts, while at the high end, Datamonitor projects that online ad expenditures will reach $12.6 billion.
EMarketer’s projections are in line with those from Veronis, Suhler & Associates, which predicts that spending will hit $7.5 billion this year.
Online ad spending remains brisk for several reasons, according to eMarketer, and chief among them is that prices are now quite a bargain, with CPMs having gone into a free fall and as much as 75 percent of online ad space going unsold.
"In a down market like this, when online advertising becomes cheaper, there are companies that are willing to experiment online, whereas they might not have during the boom years when it was too expensive," Jackson says.
"We’ll see companies doing a little bit more online, not a lot more, than they did before, just because it’s an opportune time for them to do so."
Additionally, Jackson says, ad formats that are more engaging than banners, combined with an increasing level of awareness of how online advertising works, will fuel spending growth in coming years.
"We will not have the same sort of rosy picture we had a year or two ago, as in, ‘we’re going to have double-digit growth every quarter.’ Those days are gone for sure. But now we’re getting into a much more realistic atmosphere.
"Now we have to work on the metrics and the accountability. Frankly, we need to give it a little time. TV had 50 years to get this right, radio has had 80 years, print has had 100 years. We’ve had seven on the internet. I think people need to keep that in perspective as well," Jackson says.
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Comparative
Estimates |
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Researcher |
Amount |
|
Myers Group (revised Aug. 2001) |
$4.7 |
|
Coen/McCann Erickson |
$5.4 |
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Giga Information Group |
$5.7 |
|
Jupiter Research (revised Aug. 2001) |
$5.7 |
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Merrill Lynch |
$6.0 |
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Kagan |
$6.9 |
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Simba |
$7.1 |
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International Data Corp. |
$7.3 |
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Veronis, Suhler & Associates |
$7.5 |
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eMarketer (revised Aug. 2001) |
$7.6 |
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Zenith Media |
$8.0 |
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Lazard Frères & Co. |
$8.0 |
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Yankee Group |
$8.6 |
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J.P. Morgan |
$8.8 |
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Deutsche Banc Alex. Brown |
$9.1 |
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Salomon Smith Barney |
$9.1 |
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Forrester Research |
$9.5 |
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Morgan Stanley |
$11.1 |
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Datamonitor |
$12.6 |
| Source:
eMarketer, 2001
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August 24, 2001
© 2001 Media Life
-Marty
Beard is a staff writer for
Media Life.
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