Making Sense of Online Ad Revenue Numbers
Whenever stats are released, it’s useful to put them into context. Just this week, the Interactive Advertising Bureau published the latest online ad spend revenues for 1H 09 based on data from PricewaterhouseCoopers. Year over year, the numbers are down 5.3% to $10.9B vs $11.5B in 1H ’08. This will likely get some attention as it’s the first YoY drop since the dot com bubble burst in 2001. See eMarketer chart (thanks eMarketer!) 
In a down economy, marketing, and advertising in particular, is often hard hit, discretionary spend being an easy target for reduction. As I recently heard an agency exec explain, it’s a good news/ bad news scenario: the optimists double down to stand out when everyone else is pulling back and the pessimists pull out completely so the net is a wash at best.
As a client, I detested the tendency of online media reps to attempt to prop up the case for online with the argument that TV and newspapers are dying. Too easy to look to studies showing we spend more time watching TV on multiple screens and using DVRs to record Glee and House. As for newspapers, Paul Gillin said recently “newspapers aren’t dying; readers are.” The shift to free news online is well established, especially among younger demos.
Online ad spending has suffered far less than other forms of media in this tough economy. This should not be a surprise given the influence online wields in our daily lives and the fact that online is more measurable and effective than almost all other media, generally speaking.
As consumer confidence picks up and joblessness rates slow, media decision makers are likewise, more optimistic. In a recent poll by Advertiser Perceptions, online scored +57 meaning the percentage of respondents citing plans to increase spending in budgets over the next 6 months was 57 percentage points higher than those planning to decrease spending. Further, those who predict spending concur.
GroupM says online will make up 17% of all U.S. advertising in 2010 even though it’s growing more slowly in the U.S. than in other markets. Forrester says online will make up 21% of all marketing spending by 2015. These are big numbers in the billions of dollars, especially when you consider the small base some industries have historically spent online. What it adds up to is growth in some pretty strong categories such as retail and consumer packaged goods.
Search, as expected, the most transparent, flexible and accountable media tends to gain, while display drops slightly buttressed by improvements in ‘performance’ display (more in future blog). Mobile will pick up, video will pick up.
eMarketer, October 2009
Frankly, I welcome the return to saner numbers than the triple digit growth of years past which left me as a client wondering if we were spending enough, fast enough. I’m buoyed by the optimism of media decision makers and industry pundits. How ’bout you?
