Ad recessions past and present October 8, 2008
Posted by jeremyliew in advertising.trackback
I posted earlier this week on which online media companies will survive the ad recession. If you have any doubts about the coming dip, check out the following chart showing how advertising growth has dipped in every past recession from Lehman Brothers/Barclay. The light blue line shows advertising growth rates, and it dips every time there is a recession (the red blocks):
Click on the image to see a larger view.
[Via Silicon Alley Insider]
Of course, online advertising will benefit from the secular shift from offline to online, so it will likely continue to grow, albeit at a slower rate. The latest ThinkPanmure research report on online advertising notes:
The Internet Advertising Bureau released its 2Q08 revenue report showing a material slide in display revenue, which grew 5% Y/Y in Q2—down from 14% Y/Y in Q1. Search continued to take share, maintaining 24% Y/Y growth through 1H08. Total online advertising grew 13% Y/Y during 2Q, down from 18% growth in Q1 and declining sequentially for the first time since 2002. Our research suggests that the media recession is likely to last well into next year. As such, we are now forecasting that online advertising will grow 3% in 2009, with search up 13% and display down 5% Y/Y.
Profy is more optimistic and proffers some anecdotal evidence, but I’m going with the stats over the stories on this one. Be ready.
Profy just tries to point out that there is no complete breakdown in a recession. The stats just show, that there is no further growth or a slight decline during a recession. On the brighter side, advertising seems to soar immediately after a recession. Let’s hope, this one doesn’t last too long…
CPM/CPC might experience a downturn, but true CPA will grow. That’s how Ad.Com flourished in the last down turn; they had true CPA back in 2000. Ad.Com delivered on “The more you spend, the more you make” promise, and it was gold for the direct marketers and Ad.Com.
Selling true ROI is where success will be found. Selling clicks and impressions will be tough going.
Of course you can’t argue with statistics but it does not mean that everything will just crash because we are in a recession. Instead advertisers will be making wiser choices on how they want to advertise their products to achieve maximum efficiency and I tend to agree with Stergios above that CPA will be a bigger success again now that every cent spent on advertising will be justified with profit.