The top media buyer of the world's largest media-buying organization Wednesday told Wall Street analysts that the advertising recession of 2009 wouldn't be nearly as severe as the one the one that was triggered by the dot-com crash in 2001, but said Madison Avenue's recovery would lag "six- to eight-months" behind a turnaround in the general economy. The executive, Rino Scanzoni, chief investment officer of WPP's GroupM unit, which spends an estimated $50 billion a year on media, also said that online media would be the most resilient of the major media, but that the performance of individual publishers would be "all over the place," with a few premium providers outperforming the rest of the marketplace.
"You have so many vendors that it is all over the place," Scanzoni said of online media during a conference call organized by Wall Street securities firm J.P.Morgan to update investors on the advertising marketplace. "It is very hard to say this is what the average is. The average is made up of some big, big swings, depending on what you are buying."
Overall, Scanzoni predicted online media would see only modest "single digit" growth during 2009, which compares to a pronounced contraction among the other major media.
However, he also implied the spread of online advertising prices would stratify even further between the "low-end" generated via ad networks and "remnant space," and the high-end of premium positions on big branded sites and portals.
That appears to be the picture emerging from third-party aggregators of ad network inventory like PubMatic and Rubicon Project, which have been reporting flat to declining CPMs (cost per thousands) in recent quarters. On Monday, Rubicon released its fourth quarter 2008 Market Report showing that while overall ad revenues continue to grow, average CPMs are declining among ad networks. Rubicon did not release a figure for fourth quarter CPMs, but its estimate for third quarter 2008 CPMs indicates that the average has fallen nearly 3% from the third quarter of 2007. In fact, Rubicon found there is a wide stratification occurring even within the ad network marketplace, noting that CPMs fell nearly 40% among some vertical ad network categories, while they actually rose more than 50% among some others.
GroupM's Scanzoni indicated that such spreads are occurring across the advertising and media marketplace, and that vitality could be measured more by individual brand and product categories - and the media that rely on them - than by an overall average. For example, he said media that are heavily reliant on "stressed" categories, such as automotive, retail and finance - especially local TV and radio - are performing worse than the overall marketplace, and are contracting at significant double-digit rates.
He said the same thing is true among online publishers, noting, "In the online business it's all over the place depending on what you're talking about. And how much in demand that particular fragment of that world is. It's hard to say what that general trend is."
Interestingly, Scanzoni said the ad recession of 2009 won't be nearly as severe as the ones that occurred either in the dot-com bust triggered recession of 2001, or the previous one that occurred in 1991, because he said advertising budgets had not been running up as quickly this time leading up to the overall economic crash.
"We're not coming off a huge growth uptick," he said, implying that 2009's comparisons with 2008 wouldn't be as severe as earlier recessions as a result.
Scanzoni also sought to clarify GroupM's recent revision of the terms and conditions of its online advertising contracts and invoices, a story first reported by Online Media Daily, reaffirming that the central issue is over the "ownership of the data."
"The data we are collecting when we do these online campaigns... is the property of the advertiser and the agency and is not the property of the vendor," he said.