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Online Advertising Down 5.3 Percent in First Half of 2009

Anna Johnson — Mon, 12 Oct 2009 18:08:11 +0000

A new report from the Interactive Advertising Bureau and PricewaterhouseCoopers indicates that online advertising spending declined by 5.3 percent in the first half of 2009.

Specifically, online ad spending during the first half of this year was 5.3 percent below that during the first half of 2008. Search ad spending, however, rose during the period – it grew by 47 percent compared with a growth rate of 44 percent over the same period last year. Altogether, search ad revenue was up from $5 billion to $5.15 billion.

Declines occurred in display advertising, with spending on display ads decreasing from around $3.8 billion to about $3.76 billion. Within the display category, banners, rich media, and sponsorship revenues all experienced spending drops. The bright spot was online video, which grew from $345 million to $477 million in the first 6 months of 2009.

Performance based advertising also rose this year, as impression based ad sales declined. The share of online advertising expenditure attributable to CPM-based ads dropped from 42 percent ($4.75 billion) in the first half of 2008 to 38 percent ($4.06 billion) in the first half of this year. At the same time, performance-based ad spending rose from 54 percent of online ad budgets ($6.26 billion) to 58 percent or $6.36 billion. Hybrid buys constituted the remaining 4 percent of ad sales.

Spending in other online ad media also dropped in the first half of 2009. Spending on online classified ads declined from $1.6 billion to $1.1 billion, lead generation and referral-related advertising fell from $806 million to $728 million, and email advertising dropped from $230 million, or 2 percent of overall Internet advertising expenditures, to $149 million (1 percent).

Source: Kate Kaye, “Ad Spending Fell 5 percent in First Half 2009, Says IAB,” ClickZ, October 5, 2009

Internet Radio Rises on Terrestrial Radio’s Decline

Anna Johnson — Tue, 15 Sep 2009 15:29:15 +0000

In its report, ‘Internet Radio Makes Waves’, eMarketer says terrestrial radio will continue to struggle in 2009 as advertising expenditure drops by 18 percent from that in 2008, resulting in ad revenues of $14.5 billion. In fact, according to the Radio Advertising Bureau (RAB) the first quarter of 2009 was the industry’s worst quarter ever in terms of ad spending.

That doesn’t mean radio per se is doomed. Indeed, as terrestrial radio stations decline, Internet radio stations are benefiting from growing ad revenues year over year, making Internet radio one of the fastest-growing online media categories.

ZenithOptimedia expects advertisers to spend $260 million on Internet radio and another $28 million on podcasting for a combined total of $288 million in 2009, a rise of 28 percent from the spend in 2008. By 2011, the combined figure is forecast to hit nearly $394 million.

The number of Internet radio listeners is also, as you might imagine, on the rise. Based on Arbitron and Edison Research, 42 million Americans aged 12 and over listen to online radio in a given week, up from 33 million in 2008.

The appeal of Internet radio and podcasting is hard to miss: producers and consumers enjoy much more targeted and niche content, which in turn attracts niche advertisers, as well as advertisers that can apply their budgets fairly cost-effectively across multiple networks.

Source: eMarketer, “Internet Radio Revs Up,” eMarketer, September 9, 2009

Worldwide Social Network Advertising To Decline in 2009

Anna Johnson — Wed, 29 Jul 2009 18:00:33 +0000

eMarketer expects that, worldwide, growth in social network advertising will be 9 percent in 2009, reaching $2.2 billion. This is down from eMarketer’s March 2009 forecast of 17 percent growth for the year.

eMarketer expects worldwide social network ad spending to grow substantially in 2010 though. The firm expects growth to be 18 percent in 2010, resulting in advertisers spending $2.6 billion on social networks across the globe.

In 2011, the growth rate is expected to be 12 percent, amounting to a total spend of $2.9 billion.

Senior analyst at eMarketer, Debra Aho Williamson , said changes in the U.S. market prompted the revision.

While non-U.S. social network advertising expenditure is forecast to grow by 27 percent this year, eMarketer expects the much larger amount of money poured into U.S. social networks to decline by 3 percent this year.

Source: Debra Aho Williamson, “Worldwide Social Network Spending Climbs…Less Quickly,” eMarketer, July 14, 2009

Local Businesses Responsible For 20 Percent of Social Network Advertising

Anna Johnson — Tue, 21 Jul 2009 15:00:18 +0000

Research by Borrell Associates indicates that local businesses are responsible for nearly 20 percent of all advertising spending on social networking sites.

Borrell estimates that local advertisers will account for approximately $641 million of the almost $3.3 billion spent on social network advertising in 2009.

That’s still a drop in the ocean compared with spending in other media. According to Borrell, advertising on social networks amounts to just 3 percent of all local advertising expenditure, and amounts to just a few hundred thousand dollars or less in most markets.

Meanwhile, the major social networks, Facebook and MySpace account for most (57 percent) of all local advertising on social networks. Borrell says they are the only two networks generating more than $100 million from local advertising.

Facebook, in particular, is proving popular with local advertisers, with local business advertising accounting for a massive 74 percent of its ad revenues.

Source: Gordon Borrell, “Local Ads Moving to Social Networks,” Borrell Associates, July 12, 2009

Is There Any Hope For Newspapers?

Anna Johnson — Wed, 08 Jul 2009 23:00:40 +0000

Silicon Alley Insider has deemed 2009 to be the year the newspaper died. Well, if it didn’t die this year, it’s probably fair to say that 2009 was the year the newspaper went into free-fall.

In the United States, at least, the facts paint a pretty stark picture of the plight of newspapers. We’re just over half-way through the year and already:

105 newspapers have been shut down.
10,000 newspaper jobs have gone.
Print advertising sales dropped by 30 percent in the first quarter of the year, perpetuating a downward trend that is likely to continue.
23 of the top 25 U.S. newspapers saw circulation drop by 7 to 20 percent.

The downturn in the economy has certainly reduced advertising budgets, but it has only really exacerbated a decline brought about by more fundamental shifts in media consumption and, consequently, advertising expenditure and newspaper revenues.

The two main shifts, as I see them, are these:

Job seekers, car buyers, house hunters and, increasingly, local services consumers, prefer looking for jobs, cars, jobs and local services online… simply because that’s where they will find more helpful information provided to them in a more helpful way.
News and information consumers prefer consuming content online… because the Internet offers a greater diversity of information, greater variety in how that information is presented and can be consumed (including via multi-media), and much of it ‘feels’ free i.e. there’s no cost above the cost of accessing the Internet which is what they would pay anyway.

The fact is that newspapers no longer lead in the two key respects in which they have traditionally led: classifieds and news. The Internet simply offers consumers and readers a better experience in both areas.

Moreover, the old argument that newspapers are more enjoyable or convenient to read just doesn’t wash. Even if true, we need only consider the trends outlined above to conclude that the joy of reading a newspaper just doesn’t outweigh the advantages of going online.

Meanwhile, devices such as Amazon’s Kindle are emerging to provide a similarly pleasant experience… with the added benefit of delivering all the advantages of the Internet as well.

As consumers abandon newspapers for the Internet, so too do classified advertisers and display advertisers abandon newspapers. And that’s why newspapers have lost – and will continue to lose – money unless they can come up with a hugely compelling reason for consumers, readers and advertisers to come back to them.

Unfortunately for newspaper publishers with huge sunk costs in printing presses, distribution networks, and other fixed costs, it’s not so easy to switch all that infrastructure off and simply ‘go online’.

But they’ll need some kind of strategy to exit, or at least reduce their print businesses, if they are to survive at all…

Source: Preethi Dumpala, “The Year The Newspaper Died,” Silicon Alley Insider, July 4, 2009

Kikabink News - Internet Marketing News » Advertising Expenditure

Online Advertising Down 5.3 Percent in First Half of 2009

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