Advertisers are striking harder bargains with sellers, driving down already low or negative operating margins among Web media companies. The little ad spending taking place is concentrated on a few highly trafficked Web sites, likely forcing smaller companies out of business, analysts say. It's going to be a tough year for Internet advertising. Previously, the industry was dealt a harsh blow in the third quarter when online ad spending detoured after more than four years of continuous growth. Despite an uptick in the fourth quarter, the figures reflect slowing percentage growth in the online ad market after years of unprecedented development.
Some analysts have even lower expectations for Net ad sales.
Universal McCann's Coen predicted traditional media sales also will soften from last year. It's not news that online advertising is in trouble. The industry has undergone tidal shifts in the last year, following last April's stock market downturn. As dot-coms sank, their extravagant ad budgets went with them, and surviving Internet businesses are struggling to fill the gulf. Internet stalwarts such as Yahoo have cut staff and recast revenue plans to downplay dependence on ad sales.