Online Ad Spending Rises At Double-Digit Rates, Gains Share Vs. All Other Media
Despite the global economic recession's drag on advertising budgets, the growth in online ad spending appears to be defying expectations, and is expanding at double-digit rates, according to the latest quarterly forecast …
Context & Ripple Effects
The double-digit growth reported for mid-2009 extends an arc that began with nearly $17 billion spent on US online ads in 2006 and continued through forecasts that internet spend would overtake radio in 2008 and magazines by 2010. What makes this quarter's reading notable is the backdrop: ad budgets overall are contracting in the recession, so online is not merely growing — it is capturing share from every other medium at once.
The forecast also lands against a skeptical counterpoint from early 2008, when one web ad buyer argued online was less robust than it looked and CPMs were headed down. The new numbers force a reconciliation between that buyer-side caution and the aggregate spending trend.
First-order effects
- Online publishers and ad networks gain budget share during a downturn when total advertising is shrinking, meaning their growth comes directly out of print, radio, and TV wallets rather than an expanding market.
Second-order effects
- Traditional media sellers facing falling demand plus a faster-declining share of budgets come under pressure to cut rates or bundle digital inventory, validating — or refuting — the buyer-side thesis that online CPMs were headed down even as volumes rise.
Third-order effects
- If recession-era share gains persist past the recovery, they harden into permanent reallocation, moving the industry toward the structure projected in the 2007 forecast where internet spend passes radio and then magazines as the default reach buy.
The trend: Recessions are accelerating the structural migration of ad budgets to digital, converting cyclical cuts in traditional media into durable share gains for online.