Post-Recession: Big Rebound for Digital, Internet

It may be a little early to think about what happens after the recession. But when the current downturn finally ends, it will leave behind a changed media landscape. Some changes can be predicted, based on historical trends. The two media that are most likely to make a fast, full recovery in the near future are digital out-of-home and the Internet, with the former rebounding faster and further than the latter.

If history is a guide, digital out-of-home advertising will return to percentage growth rates in the high double digits--around 30% to 40% per year--while the Internet will rebound with more modest 10% to 12% growth rates. This prediction is based on the past performance of other new media during and after previous recessions.

broadcast tv ad rev chart

Specifically, the post-recession growth rates for digital out-of-home and the Internet might mimic the recoveries of broadcast TV and cable TV in the second half of the 20th century and the beginning of this decade.

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After triple-digit growth from 1951-1952, advertisers pulled way back on broadcast TV during the recession of 1953, slashing broadcast dollars by 15.5%. Likewise, after double-digit growth through the 1980s, cable advertising basically stalled, with 2.1% growth in 1991.

But when the recessions ended, both media came back bigger than ever. Broadcast TV ad revenue jumped from below $400 million in 1953 to $1.36 billion in 1958, enjoying an average annual growth rate of 47.5% from 1954-1958. Similarly, cable rose from $1.9 billion in 1991 to $6.1 billion in 1995, with an average annual growth rate of 35.5% from 1992-1995.

yearly changes in cable and internet revenue

Digital out-of-home is now in the position that broadcast TV and cable advertising were in the early 1950s and early 1990s. Media planners have been playing with digital out-of-home for several years, but it will probably move to the back burner for a short time as advertisers batten down for an economic downturn. But it's positioned to deliver an annual average percentage growth rate of 30% to 40% in the post-recession period.

Internet advertising is in a different boat. It's already weathered one recession in 2001, and it has indisputably established itself as the hot new medium with double-digit growth rates from 2003-2008. Still, the medium is unlikely to return to the buoyant days of 35% growth.

Internet advertising is now poised to enter its second recession. Therefore, looking for parallels in the historical record, in a couple of years it will be in the position of broadcast TV after the recession of 1973--when it rebounded with an average annual growth rate of about 20% from 1974-1978. It's also in the position of cable earlier this decade, when it endured its second major recession, then rebounded with healthy (but not spectacular) 12% average annual growth from 2002-2005.

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