Advertising revenue is now slated to grow only 2.6% in the US this year, according to TNS Media Intelligence. The more surprising number from their annual report is that internet display advertising will grow only 13%. That could make life difficult for large web portals like MSN, Yahoo! and AOL.
In the third quarter of 2006, AOL’s ad revenue grew 46% to $151 million. Yahoo!’s revenue was up 18% in Q3 06 to $1.58 billion. Domestic revenue rose 14% to $1.054 billion. So, Yahoo!’s results are not far off the 2007 forecast growth rate.
If traffic to the largest web portals only grows at the rate of the internet as a whole, it would not be surprising to see reveue growth rates at these properties in the 15% to 20% growth range. Q4 numbers will probably be all Wall St. needs to see to determine whether ad based internet stock are going to have a reasonable 2007.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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