BurstMedia, Ad Network, Reports Contract Cancellations


BurstMedia, a US and UK ad network that trades on London’s AIM, says it will miss targets for this year because of ad contract cancellations since July 30 (release, via Reuters).  This news joins a long list of small but potentially significant warning signs about the online advertising market.

In its latest release, Burst noted that it had seen “higher than anticipated ad campaign cancellations” and that 2007 performance would “likely to be below current market expectations.”  Burst has been struggling, so bullish analysts will undoubtedly chalk this up to company-specific problems.  A later sentence, however, torpedoes this theory:

“Since the 30 July trading statement, a number of ad campaigns within the Burst Network have been cancelled, principally as a result of customer budget constraints.” (our emphasis).

The 2000 ad crash began exactly this way: anecdotal reports of weakness from minor players that were dismissed as “isolated” and “company specific”…followed by a shockingly rapid fall-off at the major players over the next two quarters.  History rarely repeats itself exactly, but if we are indeed headed into an online ad recession (which we think we are), we expect that this is precisely how it will look.

See also: National Ads In Recession; Google, Yahoo, et al Not Likely to be Spared 
Online Ad Recession Watch: Tracking the Signs