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The online ad business was worse than thought last year, and it will be worse than projected this year. Brighter days will have to wait until 2010, according to recent data updates.
The first comes from Barclays Capital, which had already checked in with bad news last December. Over the past year the investment bank has gone from predicting 16 percent online ad spend growth (October report) to a six percent rise (December) and now pegs online ad spending calls for a 2.3 percent increase over last year to $23.7 billion. This joins recent reports from Bernstein Research's prediction that global online ad spend will grow only 5.9 percent, and Veronis Suhler's call of 4.9 percent
As the SEMPO report showed earlier in the week, search growth is expected to stay under 10 percent. Barclay's has it at eight percent. Display ads, according to Barclay's will slip into negative territory, down 1.2 percent. For 2010 it says online advertising growth will reaccelerate to 5.7 percent reaching $25.1 billion, based on 2.7 percent growth in display, and 10 percent in search.
The second bit of bad news came out of Nielsen. It took stock of the total 2008 ad spend numbers and found internet spend was down 6.4 percent over 2007. Nielsen does not count paid search in its measurement. So its numbers basically show a dive for display ads.
Behind the numbers lie some major category shifts. For 2008, according to Nielsen, total automotive spending took a 15 percent hit. GM was off 14 percent over 2007, Ford was off 28 percent, and Chrysler was off 31 percent. That's for 2008. All three companies, which are in the top ten brand spenders, have already pledged deeper cuts for 2009. Although the car companies may move some money to their online budgets, overall spending drops in the biggest ad category will at least justify a tough 2009.