ZenithOptimedia Upgrades Online Ad Spend To 23.4 Percent In '08

ZenithOptimedia expects online ad spending in the U.S. to grow 23.4 percent this year, an upgrade from the 19 percent it forecast in December. Overall, global ad spend for online will rise 26.5 percent this year to $47.7 billion, though individual figures for the U.S. were not broken out. The UK ad holding company attributed the revision upward in the U.S. to the continued shift from traditional media to interactive. And while the political ad spend has been minimal online so far, Zenith says that will change over the next few months, further contributing to a boost in internet revenues.

But, with the absence of political marketers, Zenith has downgraded its 2009 forecast for online to 15.8 percent. And, as the law of large numbers dictates, things will slow down in 2010, with Zenith predicting internet ad growth of 12.3 percent. One positive trend: at the same time that growth rates are decreasing, online's market share continues to rise to 9.7 percent of the total ad spend this year, 11.1 percent in '09 and 12.3 percent in '10.More details on Zenith's findings after the jump.

-- Soft economy means more for online: With the economy limping along, more marketers will be encouraged to rely more on digital media the detriment of traditional media. Internet advertising is a low price buy, with large amounts of inventory, targeting capabilities and ads that can be quickly changed. The consolidation that began last year promises greater efficiencies for advertisers as well. Zenith believes still more merger activity to take place and expects that to play a role in propelling online ad growth. Zenith also cites the emergence of mass-appeal, high-profile video sites like Hulu. Search engine marketing is also expected to experience continued growth as more small businesses embrace online as part of their overall local marketing strategies.

-- Online's Olympics bump: While the Olympics is considered a TV affair for the most part, online video and social networking will also have a role during this year's summer games in Beijing. The official Olympics site will offer live and on-demand streaming video of events, statistics and a variety of social net features.

-- Newspapers: Zenith revised its newspaper forecast for this year downward as well, predicting it will decrease 2.9 percent in 2008 due to the economy and the oft-cited shift to digital. Ad revenue will continue to decrease in 2009 and 2010 by 4 percent each year. On the positive side, and reflective of the business's trends, Zenith is projecting that ad spending on newspaper websites will grow to 22 percent in 2008. If the economy improves, ad spending on newspapers could stabilize, with help from internet alliances like the Yahoo (NSDQ: YHOO) Newspaper Consortium and QuadrantOne.

-- Cable/telcos: Cable is the only TV venue that saw a significant increase in ad revenues in 2007. Zenith expects more of the same this year, with continued growth of 6 percent. Cable should see 5 percent gains from 2009 through 2010.

-- Total ad spend downgraded: Overall for 2008, Zenith is forecasting total ad growth of 3.7 percent, changed downwards from our December forecast of 4.1 percent. Outside the U.S., Zenith revised its projections up, expecting 11.1 percent for the rest of the globe.

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