Why Online Ads Are Weathering the Recession
January 7, 2009
by Jeffrey F. Rayport
It hardly matters what sector of the economy you’re in—it’s none too soon for 2008 to be over. In the advertising business, the pain has proved especially acute, compounded by the latest estimates of where ad budgets are heading in 2009.
Just last week, Barclays Capital (BCS) lowered its projections for U.S. ad spending to a negative 10% next year and a positive 1% in 2010. Every one of the traditional media platforms is getting hit, with newspapers (no surprise) taking the brunt of the pressure, with a drop of 17%, followed by TV (minus 15.5%), magazines (minus 15%), and radio (minus 13%). While other researchers aren’t offering prophesies quite so dire, one thing is clear: This is already no typical ad recession. In 1991, ad spending dropped a mere 1.9% from the prior year, while in 2001 it fell only 6.2%.
The only bright spot this time is online advertising, which, despite a series of downward revisions, is still expected to grow between 6% and 10% next year over 2008 levels.