How Badly Will a Recession Hit Online Advertising?

Recently, ThinkPanmure hosted its 4th Annual Internet Media Dinner with speakers from comScore (SCOR), Bankrate (RATE), TheStreet.com (TSCM), Forbes.com, Seeking Alpha, and Monitor110. The speakers discussed recent market trends, with specific attention toward the online impact of a “media recession” and trends in the personal finance category.

While cautiously optimistic, the speakers believe that this economic recession we are currently in will likely be shorter and less severe than ones in the past - we will likely look back on it as more of a “blip on the radar."

Management from Bankrate, TheStreet.com and Forbes.com all commented that they are seeing advertisers purchase smaller media buys that run as shorter campaigns; these campaigns are also being booked with shorter lead times. As of late May, all 3 publishers were still booking campaigns for June (typically these would be booked further in advance). Comments were also made toward advertisers pushing hard for metrics to demonstrate performance and return. (This was perceived somewhat as a paradox, given many of these advertisers run significant television campaigns where tracking return on spending is in fact harder to measure.)

Further signs of the recession came up in a discussion of ad networks; management all agreed that the vertical ad networks made sense and would do well during this slowdown, but that general or horizontal networks would experience problems – "nothing beats contextual advertising in an online world" was echoed by each panelist.

Two panelists addressed efforts that they are pursuing to hedge against the downturn. Jim Spanfeller from Forbes.com discussed his company's blogger network and ability to provider advertisers with more inventory; "use the blog network for broader reach" is one solution they are teeing up to advertisers.

Tom Clarke from TheStreet was optimistic about leveraging video for higher CPMs during the downtown; the trick, Clarke noted, is finding the right kind of video ad. Also, Clarke pointed out that MainStreet, TSCM's relatively new brand, was well positioned for advertising growth as personal finance grows faster. Clarke believes that the investing category is not likely to grow significantly, but that growth in personal finance will increase.

Tom Evans from Bankrate agreed with Clarke’s assumption that the personal finance category is growing. Given the economy right now and the subprime lending crisis, people are significantly more aware of their finances and what their options are than ever before. Evans said that in the past, individuals might not even know what type of mortgage they have or what the interest rate is. In today’s market, Bankrate finds the vast majority of individuals not only know what kind of mortgage they have, but also what the rate is and can speak at length about the process through which they obtained their rates.

One final area of animated discussion was the automotive industry’s online advertising spend. With GM announcing they are bringing half of their advertising budget online, more money will be spent within the automotive category. The panelists believe that money will be spent toward interactive campaigns designed to build the brand, similar to what consumer product companies have done with interactive campaigns.

GM will likely pursue a strategy supporting their dealerships, with the bulk of the dollars going towards category sites such as Edmunds.com and Cars.com. Further, GM will likely be looking to build brand and drive traffic to tools such as “design your own car" and "find a dealer."

Comments

[rizzn]

Even though we're not in a recession, the recession we're in will be short?

Love that I can discount so many organizations at once as not knowing economics 101 from a single paragraph.