We continue to believe that we are likely nearing (or already in) the first stages of a cyclical downturn for advertising and the Internet sector–one that will affect not only start-ups and second-tier players but majors like Google (GOOG), Yahoo (YHOO), AOL, et al. Such downturns do not begin suddenly, and they are not instantly obvious (except in hindsight). Rather, as with the housing market, the environment changes gradually, over many months, with early signs slowly becoming a steady torrent of bad news.
For the past two months, we have been tracking and analysing data points that we believe could be early warning signs (along with some offsetting, positive ones). Taken together, we believe these signs paint a clearer picture of the changing environment, one that executives and investors ignore at their peril. It’s always possible, of course, that the “worst is over,” but these cycles usually take years, not months, to play out. Here’s a summary:
Sep 12: Ad network Burst Media reports cancellations from “budget constraints”
Sep 11: Mortgage giant Countrywide fires 12,000, WaMu sees “perfect storm”
Sep 11: TNS reports two quarters of decline in US ads–first since 2001.
Sep 10: Online mortgage ads remain strong in August: Good sign or false signal?
Aug 30: How Bad Could Mortgage Mess Get for Google, Yahoo, et al
Aug 29: Will mortgage crisis hurt web ads? Sure looks that way.
Aug 29: Bankrate CEO call provides more reason to worry about online ads.
Aug 27: Cracks in Manhattan’s commercial real-estate market?
Aug 22: JupiterMedia CEO Meckler says every Internet company now for sale.
Aug 17: Dear Internet Industry: Brace for harder times
Aug 17: What happens to Yahoo, Google, et al, in recessions?
Aug 16: About that crashing stock market
Aug 3: Bankrate confirms online ad market strong, print weak
Aug 1: The market’s crashing: Are you recession proof?
July 20: Google blows up the stock market