Slowdown Forecast for Online Ad Sales – Bad News for Google

10 August 2004

Following recent reports of soaring online adspend [WAMN: 22-Jul-04; 28-Jul-04], business research analyst Jupiter Research now predicts that paid search expenditure will slump over the next few years.

Jupiter forecasts spending on paid-for listings to grow by only 11% during 2009, compared with the strong growth of 65% seen last year. And this is not the news that web search companies such as Google want to hear.

As most of Google's revenue derives from sales of ads linked to web searches, the predictions raise concerns for its potential growth prospects.

These are already uncertain given disappointing second quarter results for this year that revealed sales rises of just 7%, following double-digit sales increases for every previous quarter since 2002.

The report also calls into question Google's forthcoming initial public offering, which is already under criticism by analysts over the proposed auction style of sale and high target prices of up to $135 (€110; £73) a share.

Data sourced from: BBC Online Business News (UK); additional content by WARC staff