Online ad spending outlook lowered by $1.3 billion

December 1, 2008

What’s the first thing many companies cut when times get tough?  The marketing budget, of course. And, according to industry researcher eMarketer, spending on Internet advertising is not spared the knife.  The firm now pegs 2008 U.S. online ad spending at $23.6 billion, down from its August projection of $24.9 billion. The new forecast would still represent an 11.3 percent bump from 2007.

In particular, spending on online display ads – such as those flashing banners draped across the top of your screen –  is suffering. EMarketer slashed its display ad growth forecast to 3.9 percent from 16.9 percent. The firm noted that many of the big display ad spenders – such as automakers and retailers – are pruning budgets, with demand weak and consumer confidence shot.

Spending on search ads is also slowing, the firm said. For 2008, eMarketer forecast growth of 21.4 percent, down from 29.5 percent in 2007. Growth is seen falling all the way to 13 percent in 2010, highlighting one of investors’ major fears about the company that dominates the paid search market, Google Inc.

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