Online advertising revenues are projected to decline 8% in 2002 according to new forecasts to be released next week by Jack Myers Report.
Myers says that the figures reflect a move by analysts to conform to a standardised set of reporting data, following “years of using inflated industry figures that have resulted in exaggerated forecasts of a downturn.”
Myers says that the financial community is slowly adjusting its internal analyses to reflect more realistic assessments of online revenue performance.
“Since the Internet Advertising Bureau [IAB] and PricewaterhouseCoopers began offering audited spending figures for online advertising, Myers has consistently rejected their figures and provided far more conservative estimates, resulting in our projections for 8% declines in 2002, considerably smaller than other forecasters who have used the IAB numbers as their base,” notes Myers.
Grossly inflated The report argues that the IAB’s figures have been ‘grossly inflated’ since 2000, with the $8.0 billion estimated spend for 2001 likely to be double the actual figure. Figures from Jupiter, Forrester and other analysts are also currently over-inflated, says Myers.
“Ultimately, we believe our estimates are the most accurate, and even our estimates may be slightly inflated. As forecasters attempt to bring their spending data into realistic norms, they will do it by artificially projecting industry revenue declines, rather than by adjusting their data and admitting previous inaccuracies. Unfortunately, this punishes online publishers, but it is a problem they have inflicted on themselves.”
IAB data is not comparable Myers says that as IAB data was based on information provided by web publishers and sales organisations themselves, it included several revenue categories, such as barter and commerce, which can not be equated with the advertising revenues of traditional print and electronic media.
“Attempts to estimate online advertising revenues have been complicated by the industry trade association’s desire to publish aggressive revenue data in order to support the financial community’s early enthusiasm. Rather than holding the IAB publishers to a clear standard of reporting that would exclude the ‘funny money’ revenues from barter, equivalent exchanges, commerce, and other non-advertising forms of revenue, PricewaterhouseCoopers accepted each publisher’s data without sufficient critical oversight,” says the report.
Myers’ forecasts Jack Myers Report is therefore forecasting that online ad spending will grow by 3% in 2003 and 15% in 2004.
“Several forecasters projected continued declines in 2003. The reality, however, is that forecasters, including Myers, must be more conservative in our 2003 revenue growth projections in order to bring total revenues in line.”
