signor_john - 3:25 pm on Oct 13, 2008 (gmt 0)

Advertising expenditures normally drop in a recession, so it's reasonable to assume that ad budgets will drop overall.

Note the use of italics, however: Advertising budgets won't be eliminated; they'll just be spent more wisely, and trends that have already been in place will be accelerated. For example, an October 12 NEW YORK TIMES article [nytimes.com] reports that "Newspapers' Web revenue is stalling," and that the average newspaper is fetching CPMs of about US $1.00 for ads on inside (non-home) pages. If you're an advertiser of, say, home sinus-pressure monitors (note to moderator: that's an imaginary product), you find it more cost-effective to buy ads on health sites or sites about sinus pain than on general news papes of the PIGVILLE PRESS. Your overall budget may drop, and the PIGVILLE PRESS may see a loss of revenue from ads for sinus-pressure monitors, but owners of sites about health (and especially about sinus pain) may be doing very well indeed--not in spite of a recession, but (to some degree) because of a recession that forces advertisers to spend money more selectively.

The same trends that affect non-AdSense display ads may also have an impact on AdSense. Advertisers have better tools and more control over their ads than they did a few years ago, and the days of simply throwing ads into the ether and accepting clicks from any and all sources may be over.