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Summary:

JP Morgan internet analyst Imran Khan is lowering his online ad spend forecast into next year due to the worsening economy. Sensing that ma…

JP Morgan internet analyst Imran Khan is lowering his online ad spend forecast into next year due to the worsening economy. Sensing that marketers are becoming more conservative with their ad spend, Khan expects that long-tail advertisers will shift toward performance-based advertising forms. Therefore, display ads will suffer more than search. And so, JP Morgan is lowering its ’08 US display market estimate to $8.2 billion from $8.6 billion — or 14 percent year-over-year growth, versus its previous call for 20 percent growth. Looking to ’09, the analyst is dropping its projected display forecast to $9.4 billion from $10.0 billion (representing 16 percent growth compared to his prior estimate of 17 percent gains.)

Search gets slightly more attractive: As for search ad spending, despite the overall tightening of marketer’s online ad budgets, much of this effect offset by the market share shift towards ROI-rich performance-based ads. So JP Morgan’s search outlook is being dropped only slightly. Khan now estimates growth this year will be 27 percent from the previous projection of 32 percent. With the economy expected to improve somewhat next year, Khan is expecting only a modest slowing in search ad gains with 26 percent year-over-year growth.

Comparable to others’ changed outlook: The estimates are largely in line with other forecasters’ recent downward revisions, including Carat (23.3 percent global ad spend growth this year, with 18 percent gains in

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  1. My prediction is that search advertising spending will go up and that display and all other forms of advertising are going to go down. Google offers such a transparent model which can not be countered by the competition.

  2. What does JP Morgan know about the Internet? If performance-based ads worked we wouldn't need Adwords/Adsense-like marketplaces in the first place. Even if I was silly enough to trust your "performance" numbers, as if invisible form fields and cookie tracking matters to me, you forgot to factor in that I'm showing your ad for *free* when it's not "performing", which is why impressions are more valuable than clicks, which is where the market inevitably goes. The ppc/impression market exists to find the true value of traffic. You want traffic, you will buy it. Don't expect me to care about your performance numbers, that's your problem, your business. Don't expect me to do your work for you!

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