The Recession Will Hit the Web

The Recession Will Hit the Web; eMarketer reduces its estimates

Wall Street’s pain will make it to the Web.

On March 18, eMarketer reduced its estimates for the US online advertising market by nearly $2 billion, citing the “foundering economy.” The research firm now predicts that online advertising will grow to just $25.8 billion this year.

Though the revised number is still 23% higher than 2007’s total, it shows the economic downturn will impact the Web.

Executives of online companies have long argued that the continuing shift of marketing dollars from traditional media to the more measurable Web would insulate their companies from a recession. Some have even said that cutbacks in ad budgets would accelerate the online advertising market's growth by enticing companies to spend their dollars where effectivenes can be catalogued with clicks and impressions. "Advertisers, in maybe even difficult markets and what not, just have great incentive to get as much profitable inventory as they can from Google," said Google's Sergey Brin in a Jan. 31 call with investors.

But, eMarketer is betting that--even with the shift in ad dollars to online--Web companies will see an impact. That's not good news for Google, Yahoo, Microsoft or any of the companies betting on an online ad boom in '08.

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