Monday, October 19, 2009

Online advertising isn’t immune to the economic climate

Despite being in the digital age, online advertising is not recession proof. The medium, which was once deemed to be the next big advertising venue, has felt the effects of the slowing economy.

New data released from the Interactive Advertising Bureau and PricewaterhouseCoopers show that online ad spending dropped 5.3% in the first half of 2009. This is the first time that online spending has declined since the economic recession of 2002.

One of the biggest hit areas in online advertising is online classified and directory advertising, dropping 32% in the first half of 2009. This directly reflects the current unemployment rate and housing market due to the fact that the majority of classified ads came from help-wanted ads and real estate listings. The drop in directory advertising may simply be due to a change in the way people search for their information. Instead of searching through a hard copy or online directory, users tend to turn to search engines for a faster way to receive information.

While classified and directory advertising has decreased, search-based advertising rose 1% from a year ago because marketers are shifting to a more performance-based advertising model. Search engine marketing represents 47% of all online ad dollars, up 3% from the following year. Another strong survivor in the online world is the banner ad. Banner ad spending stayed flat in the first half of 2009 which is very promising in a down market. David Hallerman, a senior analyst at eMarketer thinks this is a positive trend noting that the online banners show that marketers understand they need an online element to complete their campaign.

Although a 5% drop in online advertising worries some, most analysts feel that if the fourth quarter numbers improve with the typical holiday bump, there is a good chance that we will likely see growth in online spending next year.

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