The Credit Crunch and its Effect on Online Advertising

[nomis5]

Online advertising, Adsense / Adwords in particular, appears to have bucked the overall decline in advertising spend. The key reason given is that spending in the online world allows advertisers to target their audience better than in other media.

But recent events in the financial markets have been unprecedented. Will the recent financial collapse force advertisers to spend more money on online advertising, to the benefit of us Adsense publishers? Or has the limit been reached and even online contectual advertising will suffer?

Here's one "straw man" view. The spend on online advertising will change direction dramatically in the next few months but the level of spending will not reduce so dramatically. Products and services that favour the failing financial situation will come to the fore, those luxury markets of past years will suffer. The overall spend on online advertising may fall but not dramatically.

Online contextual advertising has proved its worth, and we as Adsense publishers will fare better than other publishers.

Fingers crossed, toes crossed, everthing else crossed in hope and anticipation.

[swa66]

It depends on the market you look at.

In most of the world outside the USA the individuals are far less likely to be affected (stock holders might get hurt, but there are far less trouble with people living off of rising real estate they own nor with foreclosures, nor with extreme risky loans (like the no income no asset mortgages of 0.5 million (now that's asking for trouble).
So outside the US I'd expect little to change, but thats' not (in my experience, for my niches) the biggest market.

Inside the US this will reduce consumer spending to some level and that can either be handled by more advertising competing for the dollars of the consumers or less, depending n the trust the retailer have in their future.

As its likely the lack of "global money" willing to take risks will result in new entures not being able to gather funds, there is a chance the business side goes into hibernation (stagnating economy globally). In itself that might not be so bad, compared to what they were doing earlier, but it might mean less advertising as there is less competition going on. Still those that are out there in your niche might decide to compete and win a monopoly and go at tit by advertising. It'll all depend on the situation of the individual companies involved and their financial health.

[HuskyPup]

Online contextual advertising has proved its worth, and we as Adsense publishers will fare better than other publishers.

Yes...and no...the English language Net, focussed upon single markets, may be in for more than a few shake-ups.

[zett]

Funny that this thread comes up now.

Since the meltdown of Lehman and AIG on the past weekend I am seeing my figures tanking severely, adding to the negative effects of entering the slower season for my niche. EPC is totally down the drain (I see a cutback of 30%); CTR seems to be slightly affected, too. All this results in a revenue reduction of 30+% compared to the last weeks. Needless to say, eCPM is also down down down.

I do not believe this to be just a coincidence. A lot of people are postponing purchasing decisions for luxury goods and services right now; advertisers may probably feel this, too, and reduce their bids earlier and more aggressively than in past years. Also, Google is also seeing this and probably takes a bigger share.

Anyway, September is heading straight for the worst month this year.

Standard disclaimer: My sites, folks, my sites.

[Lexur]

The whole advertising market will suffer this financial crunch but the first chapters to cut are those without a proved ROI, mostly the pure branding campaigns.
Our Adsense revenues can move around small percentages +-10% or +-15% but we will not see the income's cut some newspapers are suffering.

Obviously, those websites focused, i.e., in luxury and investment will be in the lowest side of the equation.

[OnlyToday]

A slowdown in the general economy will reduce ad spending (unevenly) across the board but I'm not seeing it in my sector, at least not as of yesterday.

Any product/service that can be shopped for price may see more online ad clicking and fewer trips to the mall.

[nickreynolds]

I think there will be an effect but not just in the US. It will affect us here in the UK. Interestingly I think it will hit some niches more than others... We may be suprised that it's not necessarily luxury goods that suffer - rather the more run of the mill stuff. Funnily enough people often start economising on the essentials before the luxuries!

[OnlyToday]

Here's where we find out if AdSense is really more efficient than print. This is actually what recessions are good for, the non-performers die.

If internet advertising truly is better than b'cast and print advetisers will figure it out during the lean times. It may be good for us.

[Swanny007]

Although I'm based in Canada, 80% of my traffic is from the US so obviously I need to keep an eye on things happening south of the border. The economy locally is booming and the CDN economy is doing pretty well IMHO (not that I follow all that closely). My AdSense revenues are at record levels in my niche so it looks like I have little to worry about LOL. Well, we'll see :-)

[OnlyToday]

My AdSense revenues are at record levels...

That is not true for me but only for technical reasons. Publicly traded companies in my sector are reporting poor sales but their ads are still appearing on my site. This is where the rubber hits the (information) highway.

[nomis5]

I've got myself a temporary contract to get some extra money under my belt as insurance. As OnlyToday says, now is the time for Adsense to really prove itself. It will, I think, but even online ads will suffer in the short term. Not as bad as the newspapers and other media, but until some competitors fall by the wayside earnings are going to be lower.