Firm lowers projections for US online video ads

Research company eMarketer is sharply reducing its spending projections for online video advertising, saying the market hasn't been as strong as the firm had previously estimated.

An Associated Press report said estimates that eMarketer expects to release show US spending for online video advertising at €341 million (US$505 million) in 2008, down from the €913 million (US$1.35 billion) figure the firm circulated earlier.

EMarketer still expects the market to grow in coming years, hitting €1.2 billion (US$1.9 billion) in 2011. But that is well below the €2.9 billion (US$4.3 billion) it had projected last summer for that year.

David Hallerman, a senior analyst with eMarketer, was quoted by the Associated Press report saying prospects for online video advertising remain strong, but eMarketer had overestimated past spending. Previous estimates, he said, were based on anecdotes and interviews with industry executives, but data on actual expenditures since released show eMarketer's estimates had been off.

The Interactive Advertising Bureau, which has been issuing quarterly reports on US advertising spending, last year started breaking out expenditures for online video ads. Hallerman said those numbers ended up being much lower than what eMarketer had been estimating, prompting the firm to reassess all of its projections.

Hallerman said the slowing US economy also pushed down the estimates slightly.