How are the ups and downs in the stock market affecting online ad spending?
Stefanie Berliant
Media Coordinator
A September 2008 survey by Epsilon shows that of 175 CMOs, 63% increased their digital marketing spend in 2008 and 53% have decreased their traditional marketing spend. This survey confirms the ongoing trend that digital ad and marketing spending is growing as traditional ad and marketing budgets are reduced. However 66% of those surveyed believed that total ad spending would fall as a result of the economy. Additionally, many companies have reduced their online ad spending estimates. Their forecasts still show growth, but at a slower rate.
How resilient is online marketing to the unpredictable economy? Despite the rollercoaster the stock market has been though in the past couple of weeks, the numbers for online ad spending in first half of 2008 seem generally strong, according to Interactive Advertising Bureau and PricewaterhouseCoopers. Their data shows double-digit growth in search, display (i.e. banners, rich media and video) and e-mail when compared to the first half of 2007. Compared to the first half of 2007 overall ad spending has increased by 15.2% in the first half of 2008.
One category that did have a 5% decrease in ad spend was online classifieds. Classified ad buys tend to be short-term purchases with short-term objectives. Due to this nature of classifieds, these types of ads give a better snapshot of the strength of the economy. This negative growth closely reflects current economic weakness. The reason why most display-related ads have experienced positive growth is because they are contracted in advance. For that reason, they are not good indication the current state of the economy.
However, it is important to understand that the state of the economy is only one factor in what affects ad spend. Some believe that the ad industry was undergoing a major transformation, even before the crisis at the end of September occurred, moving from a media marketplace of high demand to one of high supply. But as both studies show, companies should continue to reallocate traditional marketing budgets to online.
