U.S. online advertising will decline by almost 5% this year mostly for recessionary reasons, according to a forecast by media analyst Screen Digest.
Researchers there took a look at the recent study produced by the Interactive Advertising Bureau of U.S. Web ad activity in 2008 and noted that while Internet ads grew by almost 10% for the year, spending in the last quarter of 2008 was almost flat, with growth of only 2.6% compared to 15% for the nine months prior.
Those late-2008 declines affected volumes in both major categories of online advertising, search ads and display, according to the IAB figures.
U.S. display ads grew only 8% in 2008, down from growth of 26% in 2006 and 31% in 2007, and in the last quarter of 2008 actually declined 4% compared to the same period the year before: the first quarter of negative year-over-year growth since the dot-com bust of 2001. That drop was somewhat offset by a 64% increase in ads placed in online video last year, says the Screen Digest report.
Still, the media analyst predicts that U. S. spending in the online display category will decline 3.6% in 2009 and that a double-digit increase in online video ads will not offset drops in more traditional Web display formats, such as a projected 8.8% falloff in banner ads this year.
Search ads have seemed more recession-proof than display because the medium is more performance-based; marketers don’t pay for any ad unless a user clicks on it. But the IAB 2008 data showed that U.S. spending pay-per-click search ads also declined in Q4 2008, going from a 31% growth rate in the first quarter of the year to only 13% in Q4 2008.
Based on those near-term results, the Screen Digest forecast says the U.S. search ad market will decline by 2% in 2009. Other non-display categories such as online classifieds will also experience double-digit declines attributable in part to tough times in the automotive, real estate and finance sectors.
Overall, the total market for U.S. Internet advertising will contract by 4.8% in 2009 and will only stabilize in 2010 when it posts a 0.4% growth rate, Screen Digest said.
“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,” Screen Digest senior analyst Vincent Letang said in a statement.
Letang said his firm expects total U.S. ad spending to show a double-digit decline in 2009, with some media such as newspapers and local TV falling as much as 20% off last year’s levels.
Network
