• by February 1, 2001

Many of our readers have asked for clarifications of reported estimates when similar markets seem to be forecasted differently. Our staff is currently developing a report on traditional media, but a recently released analysis of e-commerce estimates by Steve Butler of e-Marketer, points out the variableness of forecasts and explains some of the differences. Here’s some highlights of his report:

The underlying economic models that different research firms use have a great deal to do with their estimates for the dollar-value of e-commerce. Most research firms base their models upon US Economic Census data from 1997 (the most recent figures available), and then build out their global models from there. Assumptions about the amount of aggregate spending in the economy as well as growth rates going as far forward as 2005 account for the differences between the base-models

Bear Stearns has produced an economic model (thought to be among the best) applying a ratio of 1.51 to US GDP, to calculate the size of aggregate business-to-business spending within the US economy. This ratio has then been adjusted for economic development levels in other countries to arrive at an estimate for the global economy. Applying an average nominal growth rate of 5%, Bear Stearns has predicted that the worldwide business-to-business economy will reach $60 trillion by 2004.

The Gartner Group calculation for the size of total aggregate business-to-business spending in the world economy is $105 trillion, of which $7.29 trillion will be brought online by 2004. By comparison, Forrester Research has calculated that global B2B spending will reach $79.2 trillion in 2004, of which $6.33 trillion is internet-based spending.

The writer suggests, however, that as businesses look at the estimates forecasting the extent of e-commerce activity within their industry or among their competitors, it is better to focus on the proportion of commercial activity that is being brought online, not the absolute dollar values.

Read the whole story.