Economy Deals Online Ad Spending a Hit

NOVEMBER 25, 2008

Digital still stronger than traditional

There seems to be more bad news about the economy every day, and falling ad spending numbers are part of the mix. Although online advertising is still on a positive growth curve, that growth is slowing and will dip into the single digits for the first time in 2009.

eMarketer’s revised projection, benchmarked against the latest Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) data, puts online ad spending at $25.7 billion in 2009. That is only 8.9% over the $23.6 billion that will be spent in 2008.

In August, before the full impact of the economic slowdown was revealed, eMarketer predicted online ad spending would grow 14.5% in 2009.

Not only is the new projection lower, but recovery is expected to take longer. In 2010, online ad spending growth will return (barely) into the double digits at 10.9%, and in 2013 it will only hit 13.5%.

Even paid search, which has grown at an outsize pace for years, will see a mere 21.4% rise in spending this year.

Again, the slowing is relative, since paid search spending growth will still outstrip the overall online market through 2009. There’s a reason paid search will stay robust through the economic downturn, according to David Hallerman, senior analyst at eMarketer.

“Especially in economic turmoil, search is more trackable than any other ad format,” said Mr. Hallerman. “At this stage, it is a tried-and-true format that is supporting online growth.”