Subprime Problems Hit Web Advertising
The subprime lending fallout will soon affect certain Internet companiess. Remember the ubiquitous ads for Experian's LowerMyBills.com? Indeed, lending companies are now having to drastically cut back on spending aimed at consumers with lower credit; in fact, some analysts suggest the fallout heralds the end of cheap credit altogether.
This will affect Web advertising. According to Nielsen/NetRatings, some 16% of online spending comes from financial-services firms. In July, mortgage lenders Countrywide, Low Rate Source, Experian Group (including LowerMyBills.com) and Privacy Matters were among the top 10 biggest U.S. advertisers on the Web.
The subprime fallout could also have a greater ripple effect. Pricing for certain financial-related searches will be diminished by fewer advertisers bidding against one another, as search budgets are slashed, affecting the earnings of Google, Yahoo and MSN. However, for search engines, which accept advertising from any business sector, the effect of the subprime fallout will be minimal, compared to the many business journals that depend heavily on financial-services advertisers.