Will Online Advertising Survive the Meltdown?

By Marisa Peacock (@marisacp51) Oct 10, 2008

The once financially-juggernaut world of online advertising seems to be coming face to face with these mortal times. In March, back in happier times, a report by eMarketer projected that online ad spending would rise by 23% this year.

A few days ago, eMarketer reported about the online ad spending data for 2008. Though the numbers seem “generally strong,” showing sustained growth in a variety of advertising categories, classified ad spending was down by more than 5%.

A drop in classified advertising spending might not mean much now, but many worry that it could be an indication of things to come. Because classified ads are usually intended for the short term — what I put on eBay will sell within a week — compared to banner ads, which are often purchased well in advance, they are more likely to mirror our present economic situation, where buyers and sellers have started to scale back.

While ad spending for the first half of the year outpaced 2007, it wouldn't be prudent to count chickens before they hatch. As more banks face unstable times, inevitably, their advertising budgets are likely to be cut significantly. Yet, financial advertising only represents about 4% of global ad expenditure (says ZenithOptimedia), so it's not a huge piece of the pie, but a slice nonetheless.

Regardless of sustained growth or not, it's clear that online advertising is facing rougher, tougher times than ever before and must figure out a way to transform and rebound. The industry is relatively young and has experimented within the marketplace with favorable results. It has the benefit of being able to target niche users and learn from their behaviors in a way that other advertising cannot.

The online marketplace is wise to heed early warning signs and try new strategies, while they are still economically comfortable. Goodness knows that the rest of us would be better off if the financial industry had done the same.