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BernsteinResearch: Global Online Ad Growth Scaled Back To 5.9 Percent — And That's The Good News

Despite all the predictions last year about online advertising’s solidity in the face of recession, the new thinking is that it will remain positive as other ad categories rack up declines. BernsteinResearch’s Jeff Lindsay’s call that global online ad spend will grow only 5.9 percent — 4.1 percent in the U.S. and 7.2 percent overseas — is slightly more optimistic than the recent spate of downward revisions by other analysts. Earlier this week, Veronis Suhler said it expected web ad dollars to rise only 4.9 percent over 2008, on a total ad spend slide of -0.4 percent and yesterday, IDC said (sub req.) indicated that it would probably halve its previous 10 percent growth forecast for online ads when it releases its full 2009 outlook in next month. Still, analysts like UBS’ Matthieu Coppet have issued more dire prospects for online revenues this year, as calling for a 1.4 percent rise over last year.

Interestingly, Lindsay is more bearish than Veronis Suhler on total ad spend, anticipating a 1.7 percent drop in the U.S. and an 8.3 percent fall worldwide. Looking at particular segments, in line with other industry observers, Bernstein says paidsearch will remain the largest online ad sector for thenext five years, accounting for 35 percent of all global online ad spend this year. Worldwide, search will grow 11.3 percent (up 11.4 percent in the U.S. and with 26.6 percent gains in China).

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Meanwhile, the forecaster anticipates a 1.5 percent decline in display. The category’s share should fall slightly from 26 percent of worldwide online advertising last year to 24 percent in 2009 as web video and mobile internet ads come into their own.

As for individual companies, display bellwether Yahoo (NSDQ: YHOO) has seen its CPMs have hold up best compared to its major rivals, AOL (NYSE: TWX), which witnessed CPMs drop 39 percent and MSN, which saw CPMs fall 9 percent. The reason for Yahoo’s comparative strength is due to its salesforce-based sales model — something AOL hopes to emulate by hiring former Yahoo exec Greg Coleman to lead Platform-A — instead of the ad net model used by its competitors.

BIA/Kelsey optimistic on local: As 2008 ad spend growth steadily descended, up until the financial markets’ collapse last September, online local advertising was viewed as powerhouse. While most analysts have taken a more cautious outlook for local internet ad revs, BIA and The Kelsey Group say things will start looking up over the next four years. The two project the interactive share of local ad spending will more than double from 9 percent in 2008 to 22.2 percent in 2013. Interactive, encompassing mobile, Internet Yellow Pages, local search, online verticals and classifieds and others, will grow from $14 billion in 2008 to $32.1 billion in 2013 — for a compound interest rate of 18 percent. The main reason is that at the same time local’s traditional segment will decrease from $141.3 billion in 2008 to $112.4 billion in 2013, for a CAGR of -4.5 percent. Release