ATTENTION: Due to system maintenance on Friday, October 24, this site may be unavailable for up to four hours starting at 11PM ET.
An article recently appeared in TechCrunch, headlined: “The Online Ad Recession Is Officially Here.”
Now, the consensus of economists around the world is that the definition of a recession is negative growth for a period of two or more consecutive quarters (based on year-over-year, not quarter-over-quarter, comparisons). By that yardstick, while online advertising is unquestionably down, it is not in recession.
To double-check that fact, eMarketer performed its own calculations (derived from the reported earnings of the four largest ad companies, as were TechCrunch’s) and, based on Q1 2009 figures, those calculations do not indicate that online advertising has entered a recession.
The numbers speak for themselves.
The net US revenues at the four major search portals, which account for by far the majority of online ad revenues, all showed quarter-over-quarter growth in Q4 2008 and fell in Q1 2009. But that represents only one quarter of falling growth—and it follows the traditionally oversized Q4.
Looking back over 2008, it is true that Yahoo!, MSN and AOL each had three consecutive quarters of falling growth—but Google had no negative quarters in 2008, and it accounted for the lion’s share of online search dollars.
“One takeaway from Google’s strength relative to the other three portals is the strength of search ad spending relative to display spending,” said David Hallerman, eMarketer senior analyst. “Even though Yahoo!, MSN and AOL all get some portion of their revenues from search, the weakness of the display market will continue to drag down total US ad spending results.”
As you can see, based on the total year-over-year revenues from the four portals, the picture is less bleak. Growth was positive for all four quarters in 2008 (AOL being the exception to the rule). The single negative-growth quarter, thus far, was Q1 2009.
For context, here is the picture in dollars.
“The imbalance between Google and its competition in both Q4 2008 and Q1 2009 highlights a fundamental weakness in the overall US online ad market,” added Mr. Hallerman. “Consider that US display ad spending, such as for banners, will drop by nearly 5% this year—and then consider how that trend will likely be reflected not only for Web portals but many other publishers as well.”
Obviously, Q2 2009 is critical. If revenue growth at the four major search portals continues to fall, online advertising will “officially” enter recession.
But that hasn’t happened…yet.
Always get all the data and analysis you can trust. Look into an eMarketer Total Access subscription today.
Thursday, November 6, 1pm ET
Click to Register. Space is limited.
Join eMarketer for a free webinar:
made possible by
You've never experienced research like this.
Nearly all Fortune 500 companies rely on us.
Inquire about corporate subscriptions today.