As Forecast Ad Spending Shrinks, Web Portals Face Peril (YHOO)

By Douglas A. McIntyre Published Jan 8, 4:09PM EST

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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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.