• by Joe Mandese , December 9, 2008

It was clear from outlooks delivered by Madison Avenue's leading forecasters - including its most bearish - in New York Monday morning that online advertising growth is slowing down, but it still is poised to grow at rates that would be considered healthy by any other established medium, even in good times. And during the kind of advertising recession that the analysts now say we are heading into, online actually looks like a pretty safe haven. Even so, the consensus is that online advertising will expand at its lowest rate since it climbed out of the dot.com inspired bust of 2001.

 

"Online advertising excluding search, doesn't seem to me to be a lot different than just about all other advertising," Bob Coen, senior vice president-director of industry forecasting at Interpublic's Magna unit, and the dean of Madison Avenue economists asserted Monday morning during the opening session of UBS' annual "Media Week" conference in New York, an event where the industry's top analysts make predictions for the year ahead. Coen, who is normally the most rosy for the ad economy generally, has consistently been the most bearish for online media, but he nonetheless predicted it would grow 5% in the U.S. in 2009, a year in which all the forecasters predict decreases for the U.S. and global advertising marketplace.

Coen predicted the overall U.S. ad economy would shrink 3.0% in 2009, a marginally better prediction than GroupM's -3.2% and twice as good as the ZenithOptimedia's -6.2% 2009 U.S. ad decline forecasts released Monday morning. Globally, Coen predicted worldwide ad spending would decline 0.3%, slightly more negative than the -0.2% predictions of GroupM and ZenithOptimedia.

Representatives of both those media shops, however, noted that the advertising economy - like the economy at large - is a moving target at best, and that they would keep a close eye and revise their outlooks periodically to reflect unusually volatile times.

In fact, ZenithOptimedia CEO Steven King said his agency was moving from quarterly to monthly ad spending tracking. "Clearly, the situation is very different now, than it was eight weeks ago," King said emphasizing the erratic nature of the economy, and the advertising marketplace.

All three forecasters agreed that the macro economy is the No.1 factor in the micro decisions of advertising budgeting, and that the numbers they issued Monday morning were simply best educated guesses based on the current situation.

As GroupM's Adam Smith noted, in a typical economic recession, the ad industry might expect to see its growth ebb for two consecutive quarters, adding, "This one feels like four quarters."

The picture is considerably brighter for some key emerging markets, both geographically as well as by media sector, and online clearly leads the pack among the major media, and will actually use the downturn to increase its relative market share.

In its new forecast, ZenithOptimedia predicts online will pick up nearly two share points, rising to 12.1% of the global advertising budgets, and will account for nearly 16% of worldwide ad spending by 2011.

And while Coen was the most conservative of the three forecasters for online ad spending, he nonetheless predicts it will rise more than twice the rate of the next fastest growing media during the recession of 2009 (see table).

Coen also released data proving that the recession of 2009 in no way mirrors the dot-com led meltdown of the 2001 advertising recession. While so-called dot-com spending - advertising by companies that market primarily online - has gone negative, it is nowhere near as devastating as the market crash in 2000 and 2001.

"Ad spending increases by online marketers in traditional, all consumer media are hard to explain," Coen noted in his new outlook, which estimates that dot-com ad spending fell 6.1% in 2007 to $3.1 billion, but will dip only 0.1% this year.

"After four years of increases these new marketers reduced their ad spending in traditional media in 2007. It appeared that the online marketers were in the process of gradually reducing their dependence on the traditional media. However, now in 2008 when the brick and mortar retailers are sharply cutting their ad budgets, these new marketers have spent about the same amount for traditional media through the first eight months of this year. Time will tell whether this was just a temporary aberration due to the Summer Olympics or something else."