Optimism for US Online Ad Spend

Several forecasters predict double-digit growth this year

US online advertising proved at least somewhat recession-resistant in 2009, if not recession-proof. eMarketer estimated in December that spending on online ads dipped 4.6% last year to $22.4 billion and forecast a return to growth of 5.5% this year. Other firms have published projections in the past three months predicting that 2010 ad spending will increase more steeply.

Forecasts range from growth of 7% (UBS and Deutsche Bank) to 14% (Citi Investment Research).

Projections from the Winterberry Group (8.3% growth), Barclays Capital (8.9%), MAGNA (9%), International Data Corporation (12.6%) and Collins Stewart (13.3%) fall in the middle.

"Spending since January has become a bit more fluid," said David Hallerman, eMarketer senior analyst. "That's notably true for search advertising and somewhat for display ads. Whether or not that stronger growth will persist through the rest of the year still depends on continued economic recovery—and that is not yet a sure thing."

In dollar terms, forecasts made this year predict 2010 US online ad spending of $24.1 billion (Deutsche Bank) to $29.7 billion (IDC), with several firms estimating spending at $24.9 billion (Barclays, MAGNA, JPMorgan). eMarketer forecast in December that US advertisers would spend $23.6 billion online this year.

"That December figure is conservative," said Mr. Hallerman.

Economic recovery plays a part in these predictions, as does the fact that advertisers continue to move more dollars from other media to the Internet. A January 2010 Supreme Court opinion that would allow greater political-ad spending by corporations has also been cited as a factor.

In addition, there is the larger picture of online marketing spending. There is a broad shift toward non-advertising marketing, and that trend is particularly apparent online, where marketers are focusing more on social media and building up their Websites or brand microsites. For that reason, the spending numbers alone can be misleading because they fail to capture the full extent of online marketing's growth.

Published by: eMarketer

Published 7th April, 2010

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