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Web advertising to continue growth during recession: analysts

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Three sets of analysts reports out this week indicate that web advertising will continue to grow, despite the onset of a recession and the end of the second web bubble.

The bad news in the reports is that the growth in web advertising will slow, but still show growth at a time other advertising markets are expected to contract.

ZenithOptimedia reported Tuesday that web advertising growth would slow, with global Internet ad spend hitting $51.1 billion this year, $61.7 billion in 2009, and $75.8 billion in 2010, down from a June prediction of $52.2 billion this year, $64.1 billion in 2009, $78.2 billion in 2010. Zennith supports the claim that advertisers will be looking for more efficient forms of advertising, and will switch offline advertising to online advertising, saying that online’s share of the overall market globally will go from 8.6% in 2007 to 13.8% in 2010, up from a previous prediction of 13.6%. The report authors said that “At a time when ad budgets are under pressure, the Internet has the advantage over traditional media that it provides better levels of measurability,” according to Clickz.

New figures from Wachovia has web ad spending growing by 10 percent in 2008, down from a previous prediction of 15%. Lehman/Barclays have are pegging growth for the year at 16.9% rather than 23.4%.

Jordon Golson at The Industry Standard takes the glass half empty approach, quoting UBS analyst Ben Schachter saying “We see no business model based on advertising or consumer spending that will be immune to a downturn” and concludes by noting “It’s time to hunker down. The hurricane is coming.”

I see the glass as more than half full. Yes, internet stocks are taking a dive, but only because the market had factored high projected growth into their valuations. The thing is though, not one analyst has yet predicted a decline in internet advertising, every single one of them is still predicting growth, and in double digits at that. More money is going to be spent online, just not as much as some had previously predicted. If there’s growth in web advertising, there’s growth in revenue to blogs and 2.0 companies that rely on advertising. That’s not bad news, that’s good news!

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7 Responses to “Web advertising to continue growth during recession: analysts”

  1. Eric Hill

    Online media publishers that cover tech usually depend on big-tech advertisers (Intel, Microsoft, Oracle, Symantec, etc.). If those companies suffer on Wall Street – which they have – or in product sales due to shrinking consumer or enterprise spending, rightly or wrongly, some marketing and advertising budgets will have to scaled back. While all of the trends are pointing to Web advertising, as they should, it would seem to be a tad naive to not expect some firms to take a hit.

    If history is any indicator at all, impacts will likely be felt in the form of resource reductions at some companies that rely on advertising supplied by publicly traded firms. But, for the lucky ones, this can also be an incredible opportunity for growth and investment.

    I don't necessarily see it as a glass half full or empty, just a cyclical, scary reality that happens every decade or so. We aren't yet where we were in mid-2002. Let's hope we can start to slide to a bottom soon and slowly begin to work our way back up. We need some leadership.

    To have this crisis hit right when a lame duck president was throttling down his tenure couldn't have been worst timing. Then again, the administration really has nothing to lose at this point except their long-held ideologies.

    In terms of predictions, I think 2009 very well could be the year already anemic US print newspapers begin to fold at an accelerated rate.