IDC lowers online ad sales forecast for Asia

Market researcher IDC Asia Pacific has lowered its expectations for the region's online advertising market (excluding Japan) in 2004 by as much as 39 percent, as advertising spending by Internet companies dwindles.

SINGAPORE--Market researcher IDC Asia Pacific has lowered its expectations for the region's online advertising market (excluding Japan) in 2004 by as much as 39 percent, as advertising spending by Internet companies dwindles.

In a statement today, the firm predicted that regional online advertising sales would reach US$702 million in 2004, compared with its projection of US$1.15 billion just two months ago.

As IDC Asia Pacific senior analyst for Internet Research Matthew McGarvey explained: "The initial forecast assumed that online advertising spending by dot-coms (such as Chinadotcom, Lycos Asia and Pacfusion.com) will hold on a little longer."

Moreover, online advertising spending by dot-coms in Asia Pacific last year was down 34 percent from 1999, and it's forecasted to drop a further 51 percent this year, said IDC.

"Latent consolidation and decreasing CPM (cost per thousand) rates are still plaguing the market. However, in terms of real market growth and maturity, this year (will see) tremendous improvement," McGarvey said.

The online advertising market is expected to "correct itself" as more traditional brick-and-mortar companies begin to view online advertising as a "viable and accountable form of advertising", he added.

This year, the regional online advertising market is projected to grow over three-fold to US$225 million from US$67 million last year. From 2001 to 2004, the market's compounded annual growth rate is expected to be 46 percent.

China will be one of the fastest growing regions year on year, while Korea and Taiwan will need to combat declining CPM rates in order to pull ahead, the report noted.

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