Long-Term Internet Growth Looks Strong Despite Current Conditions

📅 August 7, 2001 - Jupiter Media Metrix (jmm.com), a global leader in Internet and new technology analysis and measurement, yesterday reported that long-term growth factors will continue to drive development of the Internet marketplace, even though current market conditions will temporarily hinder their near-term effects.

According to a new Jupiter report, the key long-term drivers-which analystsidentify as continued consumers' demand for Internet services, morefulfilling online users' experiences, growth in consumers' average onlinetenure and business cost savings that initially made the Internet sopromising, remain powerful and will become self-reinforcing with the passageof time.
Although current market constraints - including reduced financial marketliquidity, weakened consumer confidence and reduced capital and marketingexpenditures - have slowed growth in some sectors, such as onlineadvertising revenue, business-to-business trade and B2B infrastructurespending, their overall impact is expected to be relatively modest.
"While many Internet businesses today are mired in financial difficulty,it's important for all not to be overwhelmed by the negative hype that isdistorting the long-term picture," said David Card, VP and senior analyst,Jupiter Media Metrix. "There are many hurdles and setbacks to be overcomein the months ahead, but most of these should prove to be short-termsetbacks, the magnitude of which will be offset by continued long-termgrowth factors. This doesn't mean that all of the Internet companies aroundtoday will succeed, or that the stock market bubble will revive, or thatthere's huge potential in niche markets. But, a few serious businessesacross many Internet sectors will have large, thriving markets to capture."
Jupiter analysts have found that consumers are seemingly oblivious to thedot-com shakeout. Media Metrix online traffic data show that the totalnumber of unique visitors grew by over 13 percent throughout the first halfof 2001, despite the tremendous negative publicity surrounding the Internet.In addition, secured conversions at retail sites (i.e., the portion ofonline visitors to retail sites who go into secure mode, a proxy for onlinebuying) are increasing steadily as well. In January 2000, less thanone-quarter of visitors to retail sites entered secure mode-a year later, inJanuary 2001, 45 percent of online retail site visitors did so.
The dot-com shakeout and market downturn have not brought major revisions toJupiter's market forecasts, which are often conserative. Short-termsetbacks, however, have pushed out original 2005 revenue targets to 2006 or2007 in some cases. For example, Jupiter analysts now forecast that onlineretail commerce will total $104 billion in 2005-down just 12 percent fromthe figure projected last year-largely due to the online grocery meltdown.Furthermore, online-managed business travel is another sector that has beenhit by the slowdown in corporate spending, and Jupiter has consequentlylowered its 2005 revenue target to $25 billion from the $33 billionoriginally forecast last year.
"It's easy to be skeptical about the Internet's future at this point, givenwhat's happened in the stock market," said Evan Cohen, VP of data researchfor Jupiter Media Metrix. "But people were skeptical five years ago too,just as the Internet was developing as a consumer medium. At that time,Jupiter predicted there would be $5 billion in online ad spending in 2000.Our forecast turned out to be conservative, in actuality, as the majority ofour forecasts from the mid-1990s have."
Jupiter's market forecasts identify great opportunities, warn againstunpromising markets and assess the likely winners and losers by providing adirectional sense of market disruptions driven by Internet technologies.
The new Jupiter report, entitled "Market Mayhem: What the Current ShakeoutMeans for Jupiter's Forecasts," Jupiter presents a broad look at how some ofthe major inhibitors affect a series of high-level Jupiter forecasts. For afuller explanation of Jupiter's forecasting methodology, please visitJupiter's website.