Borrell Associates has released "2009 Outlook: Big Slowdown Begins For Interactive Advertising," which offers a forecast for local interactive advertising in 2009. Next year will be the first in many in which some components of interactive advertising show little or no growth, or may even decline. The changes foreseen are not cyclical, and show no sign of improving quickly, irrespective of upward movement in the nation’s economy.
For local interactive media, the big slowdown has begun a year earlier than we anticipated. The spending levels by local advertisers – which have grown at a frenetic 47% this year – are expected to slow down to a relatively paltry 8% in 2009. Local media companies projecting double-digit and even triple-digit increases in their interactive budgets next year will have a very difficult time meeting those expectations – especially if they rely on banner ads.
Traditional forms of interactive advertising such as banner ads are quickly falling out of favor and site publishers should begin looking at expanding their ad arsenal with other offerings.
Excerpts from the report: “Forecasting how businesses will spend their precious ad dollars next year is like skeet-shooting in a windstorm. We’ve got the velocity and trajectory down pat, but the gusts caused by the credit crisis make it harder to pinpoint the target. The generalities, however, are certain for 2009-spending on traditional media will decline, while spending on interactive will increase.
Our latest forecast has online media dropping 1.4% next year, while interactive media increases 7.2%.
For local interactive media, the big ad slowdown has begun a year earlier than we anticipated. Spending by local advertisers – which has grown at a frenetic 47% this year – is expected to diminish to a paltry 7.8% in 2009. Local media companies projecting double-digit and even triple-digit increases in their interactive budgets next year will have a very difficult time meeting those expectations – especially if they rely on banner ads.
The credit crisis has magnified trends that were already in motion. For most of this decade, advertisers have been viewing interactive media as a more efficient, less costly way of reaching consumers than traditional media buys. “Adjusting the dials” of advertising expenditures is normal business behavior in bleak economic environments. It can be seen in prior downturns as far back as 75 years ago, when radio advertising got a big boost (at the expense of newspapers) during The Great Depression, and 17 years ago when cable advertising expenditures accelerated during the 1991-92 recession. The dials are just about adjusted for interactive media, with some final tweaking occurring next year.
But just saying that interactive advertising will see mild increases next year isn’t telling the entire story. Not all forms of it are forecast to show the same rate of growth. We are expecting a decline in “standard” formats – banners, pop-ups, and interactive display in general – in 2009. As new advertisers move to the Web, they are less inclined to spend their newly-shrunken ad budgets on traditional formats that they perceive to be less effective. The same “John Wanamaker Syndrome” that affects traditional media – “Half my advertising works, and half of it doesn’t. Trouble is, I don’t know which half!” – is now creeping into the interactive advertising world. The sparkle of banner advertising has dimmed, and advertisers are turning their attention toward newly sparkling formats that may hold greater efficiency: e-mail, paid search and streaming video.
In summary, 2009 will be the first year since the start of the century in which some components of interactive advertising show little or no growth, or may even decline. The changes foreseen are not cyclical, and show no sign of improving during forthcoming years, irrespective of upward movement in the nation’s economy. No form of advertising yet invented has grown forever. Interactive ad spending is no different. However, the downward trend of some interactive ad formats has been hurried along by a massive economic downturn.”
See the entire report in the pdf attachment below