Rise of Online Ads somewhat exaggerated

There are Lies, Damn Lies, Statistics....and New Media Forecasts. Latest downgrade is to e-Marketer's Online Ads forecast, hot on the heels of its last downgrade just 3 months ago:

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.

Kudos to e-Marketer for shifting their position in a timely fashion, but we see a common pattern in these sort of forecasts (Online Advertising and Anything Mobile are about the worst) - absurd optimism in the early days, followed by downgrades (usually in the year later refresher report, which move the hockey stick down a bit). Its been clearer this time round as events have overtaken the annual "hide the forecast" tradition.

In a related issue, Banner Ads are under pressure - they have suffered from the classic "I know 1/2 of my advertising is working, but I don't know which half" issue, as Adweek notes:

Yet, as digital ad spending swelled by more than 20 percent over the past couple of years and many traditional brands started doing significant business online for the first time, few fretted over how to best measure the brand impact of display ads beyond the occasional Dynamic Logic survey. Now, the heat is on for many publishers, who are seeing campaigns that appear on their sites getting compared to easy-to-evaluate direct-response efforts.

“It’s really the question of brand versus direct response,” said Vivek Shah, group digital president at Time Inc., who recently characterized display advertising as being “under assault.” Said Shah: “In times like this, the balance can tilt towards direct. That’s a challenge for traditional content sites that rely on display ads.”

But that last comment is why I don't think banners will die just yet - Adwords just doesn't get the brand message out there.