A marketing research firm is dimming its Internet advertising outlook for the next four years, the latest sign of the more austere times looming for the high-tech sector.
In revisions made Tuesday, eMarketer estimates U.S. advertisers will spend $25.7 billion on the Internet next year — about $2.7 billion, or 10 percent less, than a forecast from just three months ago.
The more sobering projections extend through 2012 when eMarketer envisions $37 billion being spent on U.S. online ads. That figure represents a drop of $13 billion, or 26 percent, from the 2012 estimates that eMarketer drew up in August.
Since then, the global economy has been rocked by the United States’ worst financial crisis since the 1930s. The turmoil has included the collapse of big banks like Washington Mutual Inc. and Lehman Brothers, triggering a steep decline in the stock market despite huge U.S. government commitments aimed at restoring order.
The rescue plan hasn’t been enough to prevent mass layoffs and home foreclosures either, pushing the U.S. economy toward its most severe recession in more than 25 years.
The pain increasingly has been hurting technology companies that had been viewed as safe haven until recently.
Both analysts and investors reasoned high tech would hold up better than most industries because corporate customers would still want to buy computers and software that helped automate their operations. Meanwhile, advertisers were supposed to be still spending money freely online in hopes of connecting with the Internet’s expanding audience.
But those perceptions have shifted as more technology companies have acknowledged the tough times are crimping sales. The downturn has prompted already-weak companies like Sun Microsystems Inc. and Yahoo Inc. to resort to mass layoffs, but even stalwarts like Internet search leader Google Inc. are pinching pennies.
Investors already have been bailing out of technology stocks, including Google’s, which has plunged by 41 percent since mid-September. Google’s stock price fell $4.99 Monday to close at $257.44, near its lowest levels in 3½ years.
EMarketer’s new advertising estimates represent an even bigger comedown from another projection the firm made in March. Back then, eMarketer predicted Internet ad spending in the United States would hit $30 billion for the first time in 2009.
Although it’s not as optimistic now, eMarketer still expects the Internet ad market to grow by 9 percent next year. That would represent a slowdown from an 11 percent increase projected by eMarketer for this year.
Google should remain the biggest beneficiary because its system for showing ads next to search results is expected to remain an effective marketing vehicle.
EMarketer predicts U.S. search ads will rake in $12.3 billion next year, up slightly from its August estimate of $11.9 billion.
The Internet’s billboard-like “display ads” won’t hold up as well. EMarketer anticipates online display advertising will rise nearly 7 percent next year to $4.9 billion, down from its August estimate of a 14 percent increase to $5.9 billion.
If eMarketer’s projection proves accurate, it would represent yet another blow to Yahoo Inc., which is more dependent on display ads. Yahoo shares gained 82 cents to finish Monday at $10.21, but that price is still near the lowest levels since early 2003 — a funk that prompted founder Jerry Yang to agree to step aside as the company’s chief executive when a replacement can be found.
Apple and Google Face UK Investigation Into Mobile Browser Dominance
Apple and Google aren't giving consumers a genuine choice of mobile web browsers, a British watchdog said Friday in a report that recommends they face an investigation under new U.K. digital rules taking effect next year.
The Competition and Markets Authority took aim at Apple, saying the iPhone maker's tactics hold back innovation by stopping rivals from giving users new features like faster webpage loading. Apple does this by restricting progressive web apps, which don't need to be downloaded from an app store and aren't subject to app store commissions, the report said.
"This technology is not able to fully take off on iOS devices," the watchdog said in a provisional report on its investigation into mobile browsers that it opened after an initial study concluded that Apple and Google effectively have a chokehold on "mobile ecosystems."
The CMA's report also found that Apple and Google manipulate the choices given to mobile phone users to make their own browsers "the clearest or easiest option."
And it said that the a revenue-sharing deal between the two U.S. Big Tech companies "significantly reduces their financial incentives" to compete in mobile browsers on Apple's iOS operating system for iPhones.
Both companies said they will "engage constructively" with the CMA.
Apple said it disagreed with the findings and said it was concerned that the recommendations would undermine user privacy and security.
Google said the openness of its Android mobile operating system "has helped to expand choice, reduce prices and democratize access to smartphones and apps" and that it's "committed to open platforms that empower consumers."
It's the latest move by regulators on both sides of the Atlantic to crack down on the... Read More