The Impact Of A Possible Economic Downturn On Online Advertising Revenues

Despite the sluggish US economy research firms specializing in media and advertising have only recently begun downgrading global ad spending forecasts with minuscule amounts. Domestic online ad spending forecasts have been very positive so far with eMarketer projecting a 20.2% gain for 2011. But with the recent bad economic news piling up and the fear that the US is heading for a double dip recession will these forecasts hold?

ZenithOptimedia, the research arm of Publicis Groupe, last month dialed back its spending growth forecast from 14.4% to 14.2 %; still a respectable growth number. WPP’s GroupM still expects online ad spending to grow between 15% to 16% a year through 2012. These projections obviously do not reflect any negative impact, if any, from last weeks stock market plunge and the US credit rating downgrade by S&P.

MagnaGlobal, a strategic media research firm maintains that even with this latest economic scare the rate of innovation around the Internet will remain strong and as a result online advertising spend still looks pretty secure. The company expects that online advertising revenue will continue to rise from 17.3 percent ($30.1 billion) of total ad revenues to 22.4% ($47.4bn) in the next five years.

However, if we have learned one thing from the financial collapse of 2008 and the following recession, it is that even online advertising is not immune to a major downturn in the larger economy. We have to wait and see how this plays out in the comings weeks and months. Source