Are Online Ads Really Poised for Double-Digit Growth?

Forecast:: Segment to grow more than 10 percent per year through 2013.

Last Updated: October 7, 2009 @ 4:56 PM

You usually have to take ad spending predictions with a grain of salt. This one might require an entire field.

According to a new white paper published by something called the Winterberry Group, online display advertising is “poised to see growth of more than 10 percent per year (on a compound basis) through 2013.”

The forecast seems to contradict other estimates, which have display ads flat or dropping. According to Jack Myers’ Media Business Report forecast, released in May, display advertising spending is expected to drop in 2009 and 2010 – from $11.4 billion 2008 to $11.2 billion in 2009 and $10.8 billion in 2010, slides of 2 and 3 percent.

According to the Myers’ report, search ads will grow 7 percent in 2009 and 6 percent in 2010.

Henry Blodget, something of an expert in this stuff, predicted that display ads would fall sharply in 2009 and again in 2010.

Then there’s this: According to a report released by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers, U.S. Internet advertising revenues were at $10.9 billion during the first half, a 5.3 percent decline from the same period in 2008.

Display-related advertising totaled nearly $3.8 billion in the first six months of 2009, a decline of 1.1 percent.

(This doesn’t even include the arguments over how some research firms calculate them.)

So why is Winterberry expecting a dramatic turnaround, when others are forecasting a decline?

The paper says that “the rapid recent growth of online targeting and ad optimization platforms—as well as the proliferation of data available to fuel the utilization of such technologies—has radically enhanced the value that marketers will stand to gain from display advertising in the years ahead.”

More than that, I’m going to guess that the paper has something to do with goosing their consulting business.

Wait, here you go (my emphasis in bold):

“Despite a challenging macroeconomic environment and threat of intensified privacy regulation, the tremendous potential value inherent in improved display ad performance will drive significant new investment and accelerate merger and acquisition activity throughout the ad targeting and optimization sector in 2010.”

Which would be helpful, considering Winterberry “helps advertising and marketing companies grow shareholder value” and is affiliated with Petsky Prunier LLC—a “leading investment bank providing merger and acquisition advisory services to companies in the same industries."