At least part of the slide is due to comparisons with recent years, when the dot-com category was expanding at its fastest rates since the pre-bust run-up, said Bob Coen, senior vice president-director of forecasting at Universal McCann, as part of his mid-year presentation Tuesday updating his outlook for the advertising economy.
Dot-com advertisers--which have been a boon for traditional media, which they use to drive traffic for online commerce--grew 12% last year, 34% in 2005 and 25% in 2004, according to Coen's estimates.
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But it now seems to be running out of steam, along with many other major ad categories, as the overall ad industry experiences what appears to be a significant and protracted slowdown that is impacting most media, with the exception of online. That's ironic, because some of the slowdown is due to the fact that dot-com marketers are beginning to shift more of their budgets out of traditional media and into online advertising--especially search--much the way offline marketers have been.
"Search marketing, which offers greater geographic flexibility, has probably cut into traditional media budgets of dot-com retailers and some other categories," Coen wrote in his official report. "In 2007, full-year results could be better than the first quarter when some dot-com marketers had temporary problems, but the era of large increases is probably ending."
Coen said the surge in dot-com spending started to abate near the end of 2006, and that the slowdown is becoming more pronounced as the year progresses.
Consumer Ad Spending By Dot.Com Brands | ||
1998 | $0.654 billion | +77.0% |
1999 | $3.086 billion | +372.0% |
2000 | $5.597 billion | +81.0% |
2001 | $2.662 billion | -52.0% |
2002 | $2.150 billion | -19.0% |
2003 | $2.210 billion | +2.8% |
2004 | $2.762 billion | +25.0% |
2005 | $3.700 billion | +34.0% |
2006 | $4.155 billion | +12.0% |
2007 | $4.000 billion | -4.0% |
Source: Universal McCann |