• by Erik Sass  @eriksass1, December 29, 2010

Online advertising revenue and online retail spending will both grow by 10% in 2011, according to the latest forecast from S&P Equity Research, which also issued predictions about major players and the industry as a whole -- not all of them rosy.

Combining S&P's percentage-growth figure for 2011 with a separate 2010 estimate from eMarketer, that means total online ad revenues will grow from $25.8 billion this year to just under $28.4 billion next year. According to these predictions, the rate of increase will slow slightly in percentage terms -- down from 13.9% this year -- as well as actual dollar amounts (from a $3.14 billion increase in 2010 to a $2.6 billion increase in 2011).

Turning to specific players, S&P Equity Research Information Technology Analyst Scott Kessler predicts that Yahoo will engage in at least one significant transaction, possibly the sale of its stake in Alibaba Group or an acquisition focused on the international, social media or mobile markets. Meanwhile, S&P expects Baidu to make progress toward international expansion beyond China, as Google continues to struggle with censorship within that country, possibly related to the registration and operation of Google Maps.

Google will also face continuing regulatory and legal woes in the U.S., with potential trouble spots including the Department of Justice blocking its acquisition of ITA Software and Oracle's claims against Android. The search giant will continue to focus on the local market through a major alliance or acquisition.

On the retail side, Amazon.com will enjoy its sixth straight year of revenue growth exceeding 25%, as more and more consumers make their purchases online. S&P also predicts that Apple will finally bring iTunes to "the cloud," allowing customers to access media anywhere via their online accounts (as well as wireless syncing of iTunes).

Last but not least, the surge of activity in social media will not necessarily result in companies going public, as Facebook, Twitter, and LinkedIn are "in no rush to become publicly traded entities." With cash on hand and plenty of financial flexibility, S&P sees no immediate need for these closely held companies to assume all the headaches of the public marketplace.