Can Internet Advertising Escape Recession Woes?

12/01/2008

So goes the economy, so goes advertising, is what’s often accepted. Keeping in mind, no one can precisely predict to what extent a downturn will affect advertising, especially when it comes to Internet marketing.

The Remarkable Holding Power of Advertising

According to the Interactive Advertising Bureau, a trade association for digital advertisers, advertising has been remarkably stable since 1919. It has held steady at about 2% of the GDP. Although this holds true for advertising as a whole, some industry experts believe that in the age of Internet marketing, ad budgets fluctuate much more than the GDP.

Crunching the numbers, Morgan Stanley Internet analyst Mary Meeker says that if the economy stops expanding right now, ad spending overall would decrease by 4%.

Going back to the height of the dot com recession (2000-2002), online ad spending decreased by over a quarter, 27% to be exact. But, online marketing and advertising have changed significantly since then.

New forms of online advertising like video and social networking (e.g., ads on popular social networking sites like MySpace and Facebook) lend excitement to advertisers about online marketing.

Ad banners that were splashed across the web in the beginning of the Internet marketing craze used to be the norm. Now, they make up less than 20% of online ad spends.

Where’s the money going in online ad spending today? Over half is allotted to search marketing on major search engines like Google. Internet marketers also pour parts of the ad budgets into branding themselves online via rich media ads, which are replacing banners to a large degree.

Why Internet Advertising Is Primed to Weather Recession Woes

Internet advertising is favored by many marketers because user behavior and habits can be tracked online and ROI is measurable and attractive. Because of the evolution in online advertising, spending is much less speculative than it used to be. And, this is why, experts predict, it should not suffer as much from economic woes as other types of advertising.

Recently, eMarketer, predicted that search advertising will increase by almost 15% in 2009 and rich-media advertising will increase by 7.5%. Online display advertising is projected to grow slightly less, by just over 6.5%.

While these numbers are down from previous predictions, they still show a growth in Internet marketing and online ad spending – even in a recession. For more insight visit Internet Marketing Services