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Online Advertisers Finally Feel Housing Crunch

CNET provides one explanation for the presumed drop-off in ad spending on Google.com, as indicated by yesterday's comScore report: Financial services firms cut back on search spending in January as a result of the Federal Reserve cutting interest rates. LendingTree, one of the Web's biggest advertisers said it reigned in spending because the rate cuts were driving record traffic to its Web site. Feeling the heat of the consumer credit crunch, lenders were happy to scale back on their marketing spend as they drove greater natural traffic.

Indeed, signs of slowing growth in financial services spending hasn't appeared until the first quarter of this year. Market researcher Nielson Online says that year-over-year spending growth in the sector--which is the Web's biggest--fell to 12.7 percent in January '08 from 58 percent in January '07. Paid search growth in financial services has typically grown at a clip of between 30 and 50 percent per year, according to Efficient Frontier. This year, spending is either flat or down compared to last year, mostly due to the housing market struggles of lenders like LendingTree and Countrywide.

Financial services spends $2.7 billion on the Web annually, of which about $900 million is related to mortgages, according to Oppenheimer.

Read the whole story at CNET News.com »

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