MediaFile

Ad market finds the upside of down

January 27, 2009

There have been plenty of doomsday forecasts about 2009 advertising spending, brought on by the financial crisis. Especially when online advertising, so long on the rise even as print ad revenue fell, started falling too.

Now, Adweek threatens to mess up the picture:

So far, the first months of 2009 aren’t looking as dire as once predicted for the online ad market, according to buyers and sellers. However, many report that business has slowed down, resulting in intensifying pressure on pricing, particularly in the ad networks space.

But the abysmal first quarter that many anticipated — one in which shell-shocked clients either delayed all decision making or went into budget-slashing mode — hasn’t happened, said many industry insiders.

“I was one of the people that thought Q1 would be disastrous, but so far it’s not that bad,” said Jim Spanfeller, president and CEO of Forbes.com. While Spanfeller said that business wasn’t exactly going gangbusters, “things have been OK. It’s not the nuclear winter we feared.”

But wait, there is still pain to go around in the online ad world. Check out Silicon Alley Insider’s Jan. 26 writeup of an AdAge story about ad networks:

The amount Web publishers can charge advertisers for every thousand impressions of their ads — a rate called the CPM in industry jargon — is off by about 20% industry-wide. Worse, that’s with publishers only selling around 30% of their inventory, down from 60%.

Some say the ad networks are to blame. Essentially, the argument goes: Publishers can’t sell out their inventory, so they turn to ad networks, which sell remnant ads at a 89% to 94% discount. Agencies and advertisers can’t resist the discount and begin to buy their way onto premium sites through ad networks only. This drives down the amount of inventory publishers can sell on their own and increases their reliance on ad networks. The vicious cycle continues.

So things aren’t so hot after all, people will continue to lose their jobs, more companies on all links in the advertising chain will continue to suffer, even if the winter won’t be nuclear, as Forbes’s Spanfeller said. The upside? Short sellers won’t be able to resist big media stocks. See? Someone always wins.

Keep an eye on

  • Speaking of job cuts, check out the bloodletting at Reed Business Information. When you can’t sell your subsidiary, slash it instead. (FishbowlNY)
  • New York Times staffers learn about Twitter. It’s not supposed to be this hard, is it? (New York Observer)
  • Everybody can use an editor, even Wikipedia contributors who are angry because the online encyclopedia’s top brass are thinking about adding a layer of proofreading and fact-checking. Note to self: Being subjected to editing is not the same thing as depriving you of your rights. (The Guardian)

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