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CMR Sees Web Ad Growth in '02

Online advertising revenue is expected to rise 5.3 percent from last year by the end of 2002, according to new data from New York-based researcher CMR.

According to the group, ad spending across all media will show a slight decline during the first half of the year. But robust growth in third and fourth quarters -- fueled by optimism about the economy -- will see most forms of media bouncing back, with Internet ads outpacing an expected 2.5 percent overall growth.

While most industry veterans will still count 2002 as a lousy year for the online ad market, almost any performance looks good compared to 2001 -- and in fact, that's largely the reason that the advertising sector is expected to show growth at all during the year.

"We are off to a good start this year, which suggests a rebound over last year," said CMR President and Chief Executive David Peeler. "Nonetheless, despite the improvement over 2001, full-year 2002 will be down 6.7 percent when compared to the high-water mark of 2000."

Indeed, part of what makes the second-quarter look so robust is the unusual confluence of economic and national security woes during third- and fourth-quarter of 2001.

"The second half of 2001 I would have to characterize as an unusual timeframe for the Internet and for all advertising," CMR Senior Vice President George Shababb told internetnews.com earlier this month. "That's not only because of 9/11, but because of the very sharp downturn that was experienced in the marketplace. It was much, much more abrupt than we've seen in past business cycles. You've had a downturn that was beginning to take hold, and that downturn was exacerbated by the 9/11 event."

Among individual media categories, the Internet's "rebound" in 2002 is expected to be outpaced by only local newspapers (growing 5.7 percent from last year), radio (6.7 percent), spot TV (8.9 percent), and Spanish-language TV (10.4 percent).

Network TV also is expected to post growth of 4.5 percent, while cable, syndication, consumer magazines, national newspapers, and outdoor are predicted to see single-digit declines. CMR said it anticipates B2B magazines posting an 11.4 percent decrease.

The report from CMR comes on the heels of a report from Goldman Sachs analyst Anthony Noto, who said the likelihood of an online ad rebound remains questionable in the near term.

However, Noto raised his full-year revenue and earnings estimates for Yahoo! , due in part to the portal's recent extension of its paid search listings agreement with Overture . The agreement, Noto said, would help offset lingering woes in the online media market.