eMarketer Raises Online Ad Spending Forecast

In an upward revision, research company eMarketer Wednesday forecast that U.S. Internet ad spending would reach $16.4 billion this year, marking a 30.8% increase from last year. eMarketer's most recent prior forecast, issued in September, pegged ad spending at $15.9 billion this year, representing a 26.8% gain from 2005.

The more pessimistic September outlook came on the heels of a bearish report by Yahoo CEO Terry Semel, who had told investors several days earlier that ad growth was slowing in the financial and automotive sectors. Because Yahoo accounted for what eMarketer estimated was 19.4% of last year's online ad revenue, the research company saw Yahoo's report as indicative of a broader slowdown of growth.

But eMarketer now pegs Yahoo's contribution to online revenue at just 17.5%, said senior analyst David Hallerman. "It looks like the money that had been going to Yahoo hadn't disappeared as much as it shifted," Hallerman said.

Among the beneficiaries of the shift is Google, which this year will account for 24.7% of online revenue--up from 19.5% last year, according to eMarketer estimates.

Overall, eMarketer estimated that the Internet will account for 5.8% of ad spending this year, and 8.1% by 2008.

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