UK based media analyst Screen Digest has put out a report saying that internet advertising is not immune from the recession and may be down by as much as 5% in 2009.
This is in stark contrast to other recent views on this market which while they agree that advertising fell off a cliff in the last quarter of 2008, offer a variety of views on how rapidly things will get back to ‘normal,’ if there ever is going to be a normal after this recession. In our view many parts of the advertising industry will be bludgeoned into submission during this recession and may never recover.
The UK Advertising Association recently said that advertising fell in the last quarter of 2008 by 10%, while Nielsen in the US said annual ad spend was down just 2.6%, with internet advertising bucking the trend on both sides of the Atlantic and being pretty much the only area which was up.
Meanwhile Zenith Optimedia said that in 2008 advertising grew just 1.3% but reckons everything will get back to normal in the 3rd quarter 2009. But all of these sources report that online advertising continued to rise, even if it went a little bit slower. Screen Digest begs to differ.
It says that online advertising in the US grew by 10% overall last year, taking the IAB figures which also confirmed that the fourth quarter was almost flat up just 2.6%, but given that the first nine months of the year showed online advertising up 15%, this is much worse news that most people realize says Screen Digest.
It has revised its 2009-2010 forecasts for online advertising in the US and now predicts that all categories and sub-categories except video will decline in 2009. Banner advertising (-8.8%) will not be fully compensated by the double digit growth of online video, so that the overall Display category will be down 3.6%. Search will shrink by 2% and non-Display categories such as Classifieds will experience double digit falls. Overall, the total internet advertising market will shrink by five per cent (-4.8) in 2009 and only stabilize (+0.4 per cent) in 2010.
Vincent Letang, Senior Analyst at Screen Digest says “Looking at the US results from the fourth quarter last year, it’s very clear that online Display will fall this year despite the growth of video. Search was still growing in Q4 but the growth rate has slowed down so much that we now believe the next quarter will be in the red too – and online Classifieds will continue to fall. Our full year forecast for total internet advertising is thus down around five per cent. Display and Search, being huge and mature media, cannot be immune from the ongoing ad slump even though they will continue to outperform most other media during the period. We indeed anticipate the total US ad market to go down two digits in 2009 while some media (press, local TV) could be down by up to 20 per cent.”
The question then immediate occurs that if online advertising actually goes down 5% in the US, surely the entire market cannot sustain a mere 2% fall. Usually online is the segment that is holding everything up. It all depends upon your point of view on this recession. Either the Fourth Quarter 2008 was the trough of the recession and from the end of the first quarter things start getting better, or when figures for the first quarter come in, things will have continued to get worse leaving recovery well into 2010. We all hope for the former, but fear the latter.