Last month, we were surprised to see that some of the biggest mortgage advertisers had increased their online spending in August, even as the mortgage market collapsed. This seemed to suggest that our thesis — that mortgage woes would hurt the online ad business — might be overly gloomy.
September’s spending report, however, supports our original concerns. Nielsen/Netratings again reports (pdf) that mortgage/financial advertisers represented four of the top 10 web advertisers in September. Of the four, Experian Group Limited increased its spend 7%, to $44.7 million, and NexTag Inc. remained about flat at $50 million. But the other two advertisers recorded drops: Countrywide Financial (CFC), which had been slowing its rate of increase throughout the summer, dropped a modest 1.5%, to $34.9 million. And Low Rate Source’s ad spend plummeted from $51.7 million to $22.9 million — a 56% drop.
(Spending by the top 10 advertisers in total, meanwhile, also dropped from August to September: see details here)
We’d expect to see more declines ahead: Today Countrywide said that mortgage fundings were down 44% in September compared to the same period a year ago; mortgages in process and mortgage loan applications were also down 36% and 39%, respectively…
Some readers have argued that we are overly pessimistic about the effects of the housing crisis on Web ads, and the Nielsen findings obviously need to be kept in perspective:
• Even if the mortgage business does stay in the pits, advertisers are more likely to advertise on the low-cost Web than other outlets.
• The Nielsen data is based on CPM-based ads, and doesn’t include search ads, performance campaigns, etc. So a Web ad slowdown will have less effect on search leaders, particularly Google.
• Mortgage applications ticked up for the first time in three weeks last week.
That said, our main concern here is that a pullback in mortgage advertising will just be the first shoe to drop as a prolonged housing/mortgage crisis weakens the overall economy.