"To judge from a hysterical press, one might think the apocalypse was already upon the media industry," Denton noted, citing J.P.Morgan analyst Imran Kahn's recent downward revision for online ad spending next year (Online Media Daily Nov. 3), "brutal" layoffs at big media concerns and increasing anxiety throughout Madison Avenue and the media world alike. In regards to Kahn's new prediction of a meager 6% 2009 growth for U.S. online display ad spending, Denton said, "We should be so lucky... executives should be planning now on a decline of up to 40% in advertising spending during this cycle. Instead they're sleepwalking into economic extinction - even those lean online ventures which were supposed to take up the mantle and preserve New York's position as a media capital."

Denton said a 40% decline isn't necessarily "overly pessimistic," noting that many of the recent forecasts and revisions don't take into account the possibility of a "deep recession," and its residual effect on the advertising economy.

"Internet advertising is by no means immune," Denton asserted, adding. "Advocates of the internet claim that the sector is both more mature than it was during the last downturn; and it's more "measurable" than other media. They hope to avoid a repeat of the 27% decline in 2000-2002. Good luck with that. The sector's maturity also means that its underlying growth is more sluggish than it was in the late 1990s."

Denton's did not cite a similarly pessimistic forecast released recently by media industry analyst Borrell Associates (OMD Nov. 7), which predicted that 2009 would be the first year since the start of the new century in which some components of interactive ad spending will show little or no growth. Borrell predicted a loss of "one dollar out of every seven" spent on interactive advertising next year, or a 14% decline, and said specific areas like email and paid search would be off even more.

"In 2001, Internet advertising swung to a 13% decline from 78% growth the previous year; this time the sector starts from a growth rate of 27%," Denton noted in Wednesday's post. "I would hate to see what a swing as violent as the dotcom burst would look like."

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