For years, Countrywide ranked as the largest housing-related lender in the U.S. But by the third quarter of 2007, the company announced that it would have to refinance or modify up to 80,000 loans worth $16 billion in order to ward off foreclosures due to borrower hardships, defaults and other factors. As a result, the value of the loans Countrywide held fell by more than 40%, and the company was forced to scale back its business by closing offices and cutting staff.

But Countrywide didn't scale back on advertising. In fact, according to Nielsen//NetRatings data, the lender actually increased online ad spending last year. In five months, Countrywide jumped from being the fourth-largest online advertiser--spending nearly $35 million on over 17 billion impressions in July--to the second-largest in November, spending $57 million for roughly double the amount of ads. And a significant portion of those ads ran as sponsored links or display units across Google, Yahoo and Microsoft's search pages and content networks.

Industry analysts like ZDNet's Larry Dignan are forecasting the so-called Countrywide "ad gravy train" to derail once the Bank of America buyout is settled. "When the deal closes the second largest Web advertiser will disappear," Dignan wrote. "It's highly unlikely that Bank of America will spend so lavishly on online advertising."

As the second-largest bank in the nation, Charlotte, N.C.-based Bank of America was not immune to the ill effects of the housing slump. The bank reported net income losses of 32% for third-quarter 07, in addition to setting aside some $865 million for imminent credit losses. Still, Bank of America was able to bail Calabasas, Calif.-based Countrywide out last year by pumping some $2 billion into the mortgage lender's coffers--a move that analysts have said made the acquisition almost inevitable.

"Bank of America bailed them out months ago when the market started collapsing, but it seemed like just a bridge investment until they were ready to pull the trigger," said Rick Sizemore, CSO at Multimedia Intelligence. "Now that they're moving forward, you can expect Countrywide's operating structure to be heavily scrutinized--with budget reallocations and restructuring to get the most bang for the buck."

"Simply put, Countrywide's penchant for advertising will disappear," Dignan wrote. "To Bank of America CEO Ken Lewis, Countrywide's willy nilly ad spending will just be more fat to cut." If so, then the Web's second-largest advertiser will practically disappear.

Still, both financial institutions said that no major operational changes would occur in the near term, as Bank of America plans to operate Countrywide as a separate brand, at least until 2009. Sizemore said that Countrywide could even further increase ad spending as a show of brand strength. "Restructuring is important, but so is Countrywide's presence as a brand," Sizemore said. "They may advertise more to show that 'we haven't died, we've just been acquired'."

And while Bank of America could eventually become more surgical with cuts and likely start ramping down ad spend, Sizemore said it may not be such a bad thing for the Big Three. "With Countrywide spending less, there will be more inventory available, and other advertisers will move in to buy it up," Sizemore said.

At press time, ads for both Bank of America and Countrywide appeared during searches for "mortgage" on Google and Yahoo, while two Countrywide ads showed up on MSN.

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