Internet analyst revises forecast

The dotcom shakeout has forced Jupiter Media Metrix to amend its internet marketplace forecasts in the US, while the local arm of the measurement specialists said the growth of Australian unique visitors may be flat for the rest of the year.

Current market conditions, such as reduced financial market liquidity, weakened consumer confidence and lower capital and marketing expenditures, will hinder growth in the short term, Jupiter said. However, Jupiter did offer hope for the long-term growth of an ailing internet marketplace in its latest report.

Online advertising revenue, business-to-business (B2B) trade and B2B infrastructure spending have been constrained by current market conditions, but Jupiter expects the overall impact of these constraints to be relatively modest.

Locally, Greg Petterson, senior analyst at Jupiter Media Metrix, said the local market is hindered by a slow broadband uptake, but consumer demand will see the internet grow.

"Broadband penetration is critical to driving revenues and building market for paid content and advertising revenue," Petterson said.

The two issues hindering internet growth in Australia are the slowdown in unique visitor growth, which has flattened after a slump in PC sales and the low penetration of broadband.

Jupiter Media Metrix, in its US report, has revised its market forecasts, which the group described as not major revisions, despite the market downturn.

Short-term setbacks have pushed out original 2005 revenue targets to 2006 or 2007, said the report. Jupiter analysts have amended its forecast for the online retail commerce total in 2005 to reach $104 billion, 12 percent lower from the figure projected last year due to the online grocery meltdown.

Petterson said that in Australia, most of shake out in online retail had occurred. "We hope consolidation has slowed down and things are stabilising," said Petterson. "Retail will always do it tough in Australia because it's a much smaller market."

There have been no figures revised in Australia as yet, but Petterson said growth is not as high as previously expected.

Websites are critical to the purchasing process, Petterson said. Jupiter research has revealed that many surfers are online window shoppers, who browse and search for goods from their workplace and then go on to complete the purchase offline.

Market conditions and the dotcom shake out has gone relatively unnoticed by the average internet user, the Jupiter analyst said.

Increasing consumer demand for internet services, growth in average consumer online tenure and business cost savings are the main long-term drivers of the internet marketplace which will become self reinforcing with the passage of time, Jupiter said.

In the US, David Card, vice president and senior analyst Jupiter Media Metrix, said the many hurdles to be overcome in the months ahead should prove to be short-term setbacks and will be offset by long-term growth factors.

"This doesn't mean that all the internet ventures around today will succeed, or that the stock market bubble will revive, or that there's huge potential in niche markets. But, a few serious players across many internet sectors will have large, thriving markets to capture," Card said.

Jupiter updates its market forecasts each year based on the prevailing market conditions.

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