Henry Blodget at Silicon Valley Insider threw some cold water on display ad market projections, contending that we can expect it to contract by 10-20% next year. He points to a few pieces of evidence in an IAB/PricewaterhouseCoopers report (full PDF), that, against the dismal economic backdrop, paint a gloomy picture:
- non-search advertising (display, but also classifieds, lead gen, and email) grew only 5% in Q2
- bucking a previously consistent trend, Q1 ’08 online ad spend was lower than Q4 ’07, and Q2 ’08 was lower than the previous quarter
- both (primarily) display ad-supported Yahoo and Gawker Media have announced layoffs
Now Blodget was primarily taking aim at the proliferation of niche ad networks, which have primarily relied on display/CPM business models and a rosy economic outlook to justify their growth and online ad spend projections. He probably has a point. But, as the report’s figures relate to publishers with a more diversified ad revenue model (i.e. contextual and display, at the very least), the picture is a bit different:
- total online ad revenue grew 15.2% to $5.7 billion in the second quarter 2008, as compared to the same quarter last year
- the bulk of that growth was in search revenue, which grew 24% to $2.5 billion; search revenue now comprises 44% of online ad revenue (PwC’s definition of search revenue includes contextual advertising)
- classifieds and lead-gen were both down, and email flat, in Q2 08 vs Q2 07 – these were the other non-search categories lumped together with display in the 5% aggregate growth stat that Blodget reacted to
As I had written earlier this month, as the economic situation worsens, advertisers are more sensitive to performance measurability, which is why contextual advertising hasn’t shown the relative weakness in growth that display, and especially other advertising formats have recently. But, as Henry Blodget repeats, none of these figures include data from the most recent economic shock, so all bets are off when it comes to guessing how low it can go.
This entry was posted on Wednesday, October 22nd, 2008 at 7:23 pm and is filed under Online Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.