• by July 28, 2004

ONLY TIME WILL TELL -- Well JupiterResearch has "released" its new online advertising forecast, but the picture isn't much clearer than what they leaked to the Wall Street Journal two days ago. Jupiter pegs online ad sales at $6.6 billion in 2003 and says it will grow to $16.1 billion by 2009. The in between part was left out of the official release, but we can assume we'll be reading about some bullish online ad growth estimates for those intervening years later today when reporters who were actually briefed by Jupiter pry those numbers loose. Interestingly, though, Jupiter's spin wasn't anything like the Journal's take (Real Media Riffs July 27): that online ad growth was coming at the expense of magazines.

Without having access to Jupiter's long-range numerics, it's hard for us to understand where the online ad growth may actually be coming from, but from what we can tell, it may be more of an incremental gain than one that is cannibalizing on other media. How do we know this? Frankly, it's our gut. But if we use the longest-term forecast we have at our disposal, Veronis Suhler Stevenson's annual Communications Industry Forecast, it does not appear that online ad spending growth is coming at the expense of traditional media.

Take consumer magazines, for example. That's the medium the Journal said would be most adversely impacted by the growth of online ad spending over the next few years. In its 2003 Communications Industry Forecast released last year, Veronis estimated that that magazines would account for a 6.4 percent share of U.S. ad spending in 2004. By 2007, the last year of Veronis' forecast, the investment banker expects magazines to account for 6.4 percent of U.S. ad spending. No change. Now it could be that the Jupiter folks are better forecasters than the Veronis people. Or it could be that Veronis is now poised to revise its outlook for magazines, online, and other media based on recent developments. We don't know. What we do know is that Veronis will release its revised outlook for next week when it issues its 2004 Communications Industry Forecast. And just for the record, Veronis has the same base as Jupiter does for online ad spending in 2003 -- $6.6 billion - but the farthest out it can see, 2007, only predicts online ad spending at $8.6 billion, which seems to be something close to half of where Jupiter seems to be coming in.

Now we're not saying who's right and who'll be proven wrong, but there are clearly some big discrepancies in these numbers. One thing we do agree with the Forrester team on though, is the reasons driving online advertising growth. "With targeting technologies, the discovery of search by major advertisers, and real measurement and planning tools, the Internet is ready to fulfill its early promises of effectiveness, reach and trackability," stated Gary Stein, senior analyst at JupiterResearch.