Those recent predictions about the growth of the market for online advertising and marketing which said digital would continue double-digit growth despite recent financial turmoil have now gone the way of most US investment banks after the carnage of the past week.

Yahoo’s share price is tanking and earnings for all major digital companies have been revised downward.

As reported on Clickz, UBS bank slashed Google’s 2009 anticipated revenue by 4%, Yahoo’s by 9.1%, and ValueClick’s by a “stunning” 19.3 percent. Estimates for Q4 2008 were also lowered, though not as much.

Reuters, meanwhile, reports that another investment bank, Wachovia (which if I recall correctly was just taken over the other day to save it from going to the wall) is now predicting that Web ad spending will grow by 10% next year rather than the previously estimated 15 percent. As well, Lehman/Barclays shaved a full $3 billion from its 2008 U.S. online ad estimate, pegging growth for the year at 16.9% rather than 23.4 percent.

But at least they are predicting some growth. The one thing all news analyses agree on is that the overall advertising market is going to contract next year.

UBS analyst Ben Schachter said that “We see no business model based on advertising or consumer spending that will be immune to a downturn…As corporate profit forecasts come down, we expect planned advertising spending will be delayed and/or cut.”

The Los Angeles Times reports that venture capital firm Sequoia called their clients into an emergency meeting and when they came into the conference room they were confronted with a large tombstone which said “RIP, Good Times” on it. They were then subjected to a lecture about how bad things were likely to get and what they needed to do to retain Sequoia’s investment.

An executive who attended the meeting was quoted as saying it was not a “doom and gloom” message, but a serious one. “They basically said: ‘This is a business. This is not an excuse for you and a bunch of your friends to have a pool table and goof around with something you think is neat.’ I didn’t come away thinking that the sky is falling or that I have to move to Canada, just that these guys are taking this seriously.”

That’s a good takeaway - the sky is not falling, but it’s time to get sharp. And that can’t be a bad thing.

Tags: credit crisis, digital, Google, Internet, online advertising, venture capital, Yahoo

Posted on Saturday, October 11th, 2008 at 9:30 pm under Marketing, Media companies, Technology.

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