Borrell: Banner advertising the big loser in '09 online ad decline

A new report by Borrell Associates scheduled for release today paints a dim picture for those who’ve bet the ranch on a future of counting page views and ad impressions. The credit crisis and the general economic downturn have moved up turning points in the local online ad revenue picture, and Borrell has lowered growth projections for next year as a result.

For local interactive media, the big slowdown has begun a year earlier than we anticipated. The spending levels by local advertisers — which have grown at a frenetic 47% this year — are expected to slow down to a relatively paltry 7.8 percent in 2009. Local media companies projecting double-digit and even triple-digit increases in their interactive budgets next year will have a very difficult time meeting those expectations — especially if they rely on banner ads.

Beyond the lowering of expectations is the real stunner of this report: that local and national “standard” ad formats will actually decrease next year. In fact, the decline at the national level has already begun. The below graphic from the report tells the story in the bottom and top two rows.

The decline isn't even

While local ad spending is still growing (bottom row), the top two categories are declining. Unfortunately, these are the types of ads that most local media companies are selling, which is why Borrell thinks they are going to have such a tough time meeting those double and triple-digit growth projections.

While 2009 is going to be a tough year for everybody offline, Borrell is actually projecting some potential “bounce back” for the newspaper industry, especially smaller market papers. “We think that all of the wind that got sucked out of newspapers has been sucked out,” Borrell told me, “and while there will still be some declines in big market papers, we expect significant growth in smaller papers, perhaps even double digit.” TV and radio, he predicts, will have a tough year. Online, Borrell adds, it’s the first time since 1998 that online ad growth will only be in single digits.

But the big story here is the growing lack of interest locally in banner advertising. “It’s going to be a very tough year,” Borrell said, “for anybody with a mass marketing mentality that more traffic equates to more revenue.” Unfortunately, that includes most people who run local media websites.

Another important note in this report is the continued growth of the “promotions” line in local advertiser budgets. As web technology continues to become more user-friendly (while at the same time more sophisticated), more companies are spending money there that used to go to advertising. But this category offers something that pure advertising doesn’t — the ability to absolutely measure results, something that is a growing concern in the minds of all advertisers, whether national or local.

But perhaps the most chilling commentary in the report is this: “The changes foreseen are not cyclical, and show no sign of improving during forthcoming years, irrespective of upward movement in the nation’s economy.” The horse has left the barn, and it ain’t comin’ back.

Borrell on local website valuations.

Comments

  1. This man is too pretty for words…..anytime, anyplace, anywhere…..

Trackbacks

  1. […] No? Then why wring your hands over the latest report from Borrell Associates (previewed by Terry Heaton, but not immediately available on the Borrell site this morning) which essentially begins to carve the headstone for traditional online banner advertising? Banners were great as a transitional medium – something to help advertisers and consumers alike get their heads around the notion of digital advertising – but they’ve never been a good idea in the long run. Endlessly looping enticements to punch a monkey aren’t going to wind up in the Advertising Hall of Fame. Or rather, if they do, they’ll be there in the same ironic sense that reprints of Ronald Reagan hyping Chesterfield Cigarettes are – as a head-shaking reminder of how wrong we went. […]

  2. […] Banner advertising the big loser in ‘09 online ad decline “For local interactive media, the big slowdown has begun a year earlier than we anticipated. The spending levels by local advertisers — which have grown at a frenetic 47% this year — are expected to slow down to a relatively paltry 7.8 percent in 2009. Local media companies projecting double-digit and even triple-digit increases in their interactive budgets next year will have a very difficult time meeting those expectations — especially if they rely on banner ads.” […]

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