Remember six months ago, when everyone agreed that the growth of online advertising would just slow as the economy crashed–because online advertising was so accountable, all those dollars were flowing online, etc. Oops.
At the time, we said, let’s be serious, online ads will collapse in 2009. Based on Q4 performance, they certainly seem poised to do so.
Here’s the relevant info from the latest IAB-PriceWaterhouseCoopers report:
Online ads grew only 2.6% year over year in Q4, including search.
This represented a massive deceleration from the rate of growth in previous quarters and years (see the column on the right):
Now, take a trip back to memory lane and review what happened last time: Online ads shrank for two years and ended up 25% below their peak level before beginning to climb again.
Do we think it will be that bad this time? No. Ad spending is flowing online, and half the customers aren’t suddenly going to go bankrupt.
We think online ads will shrink about 10%-20% over the next two years. We’re hoping to be pleasantly surprised on the upside.