Online Advertising growth reeling under recession

While online advertising is driving newspapers into bankruptcy, it itself is not in the pink of health.

While PricewaterhouseCoopers’ estimates show that online advertising revenues in USA grew at the rate of 10.6% in 2008 and rose to a level of $23.4 billion, the growth rate for online adevrtising has been the slowest since the year 2002.

So, is online advertising also reeling under recessionary pressures? It sure seems so as the growth in revenues in the year 2007 was 26% over the previous year taking the final figures to $21.2 billion.

Spend on search ads still retains its dominant position amongst different formats of online advertising, totaling $10.5 billion for 2008 and making up 45% of total online ad revenue. Display-ad revenue was $7.6 billion, or 33% of the total.

Several categories of online marketers brought down their online ad spending in 2008. Retail advertisers, the largest category of online marketers, spent $5 billion in 2008, which was down 7.4% from $5.4 billion in 2007. Financial-services advertisers spent $3 billion in online advertising in 2008, down from $3.2 billion in 2007.

Auto advertisers increased their spending slightly, with their figures at $2.8 billion on online ads  in 2008, up from $2.7 billion in 2007.

Consumer-packaged goods and food marketers increased their online ad spending, to $1.5 billion in 2008, up from $925 million in 2008.

Recession claims ITV’s online business

Optimists are hollering to whoever would care to listen that the economy will take a rebound by end of 2009 but the signs tell a different story altogether. The bad times for advertising companies continue with recessionary economy claiming its latest victim.

There have been many newspapers that went bankrupt over the last few months due to recession and the latest news is that ITV, the biggest commercial television network in the UK, has announced a pre-tax loss of £2.73 billion (US$3.84 billion). Recession is continuously taking its toll on publishers across the board.

ITV has been ailing because of shrinking advertising revenue in the slowed down economy. The company is aiming to sell  its online online properties Friends Reunited and Scoot and shut down its ITV Local search service.

This bleak development will render over 600 people jobless and add to the economic pressure in the UK.

I shudder at what is becoming of these otherwise bigger players and wonder how could they allow their overheads to go so overboard that a fall in advertising revenues pushes them to bankruptcy within a year or so.

Where’s their management? Couldn’t they see this coming? Shouldn’t they have taken an eventuality like this into account before embarking on ambitious expansion plans and adding onto their already bloated overheads?

I bet their management team took a neat package home around the year and contributed to the overall loss figure in a major way. And all the while, they allowed this oversight snowball into a catastrophe.

Wow… am glad that am working for a mid size agency that emphasizes as much on controlling costs as it does on acquiring new business or creating fresh ideas.

What do you say, guys? If they can ask and get huge rise in pay for showing profits, shouldn’t the management of such companies be held accountable for the loss and pay for it through their nose?

Have your say… join the discussion… leave a comment…

Sign of bad times – Google quits Radio Advertising

The times are bad… real bad… and no advertising guru is willing to bet against the odds.

Consumers are just not consuming the way they used to do… advertising agencies are perplexed… advertising revenues are consistently falling…  prestigious newspapers are going bankrupt… advertisers are crying over their rapidly diminishing profits… and no one seems to have the answer.

The question, you ask!

To spend or not to spend, that, my dear advertiser, is the question!

Even the big daddy, Google, is cutting down on its various ventures… specifically those dabbling with the traditional media. The latest is that Google has bowed out of the radio advertising business while it intends to keep working on selling ads for streaming audio on the Web.

The news adds yet another Internet giant giving in to the mounting economic pressure. And what the heck… if that means that around 40 odd employees will lose their jobs. Just blame it on recession, and move on!