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With the financial markets in serious turmoil and financial services firms hurting, it's not surprising that financial services firms are spending far less on online display advertising than they did when times were better.

A new report by Nielsen highlights just how substantial the decrease is and indicates that it's having a noticeable impact on the entire online display ad market.

According to a MediaWeek article on Nielsen's report, advertisers in the financial services category spent 27% less on online display ads in the first half of 2008 as compared to the first half of 2007. This resulted in a 6% overall year-on-year decline in online display ad spending through the first two quarters of 2008.

Financial services firms have always been big spenders and not surprisingly, have traditionally accounted for a non-negligible chunk of the spending in the online display ad market.

Thus, it is clear yet again that the economic impact of troubles in the global economy does find its way into the technology/internet sector.

In this case, the woes of financial services firms have trickled down to the online businesses that have relied on them for ad dollars.

While this impact does include more than a few large online players which have properties outside of the finance vertical, there are also quite a few companies that have little exposure outside of finance. Naturally, these companies will almost certainly feel some pain.

Yet for the online display ad market in general, the news is not all bad.

Nielsen reports that spending in other categories, including consumer goods and automobiles, for instance, rose significantly. The former saw an increase of 32% in the first half of the year, while the latter saw and increase of 45%.

In all, total online ad spending, which, of course, includes search advertising, increased 11% in the first half of the year.

So where do we go from here?

That's really anyone's guess. While I certainly don't think that the situation is rosy (we know ad cuts are happening elsewhere), the financial services category certainly is certainly a unique case (thus far) and therefore a substantial double-digital drop in online ad spending in other categories is probably unlikely at this point.

That said, diversification across multiple verticals is a huge advantage in this market. This, of course, inures to the benefit of media companies and portals.

But beyond diversification across verticals, diversification across multiple business models clearly has its advantages, as I noted in my discussion of a recession’s potential impact on online businesses.

Drama 2.0

Published 23 September, 2008 by Drama 2.0

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Comments (1)

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Anthony

Does this mean that Google will suffer too, as they're a glorified, global advertising agency, however, diversified their customer base?

Previously, they've claimed immunity from such downturns, and aren't that exposed to any one sector, but is their bullishness really justified in a cooling economic climate?

Anthony Sharot

almost 8 years ago

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