Online revenues to fall in US

27 February 2009

FRAMINGHAM, Massachusetts: Online ad revenues could fall by 5% in the first quarter of this year in the US, the first such decline since the dotcom crisis at the start of the millennium, according to market research firm IDC.

While online is thought to be well-placed to grow in the downturn relative to other forms of media, IDC says web adspend increased by just 0.4% in Q4 2008, to $7.13 billion (€5.6bn; £5.0bn).

It also predicts that online revenues will continue to struggle in Q2 this year, before returning to growth in the third and fourth quarters.

It previously forecast that online would grow by 10%, but it now argues that the challenges the economic downturn is posing to Google and Yahoo means double-digit growth is now highly unlikely.

Display and classified spending, in particular, are set to slow the medium's expansion having seen a drop-off in demand in late 2008, meaning search ads will propel any growth this year.

In the troubled US print sector, the Washington Post Co. has also reported a 77% decline in its fourth quarter income to $18.8m, with ad revenues at its flagship title down 21%, and total revenues from all of its news titles falling 13%.

By contrast, Discovery Communications, the cable network, saw its ad revenues grow by 6.4% in Q4 last year, while its net income reached $106m.

Data sourced from Wall Street Journal; additional content by WARC staff