Talk of an economic slowdown is everywhere these days. Terrible. The effect of a sustained market contraction is predictable in many areas of the economy — the price of gas goes up, people take fewer, shorter trips. Rising food costs leave less money available for luxury goods — Faberge eggs and the like.
Well, in one corner of the economy that’s become pretty important to anyone who hangs out on the Internet, the impact is less clear. Will a slowdown, contraction (anything but a *recession*!) hit the online advertising economy, that sublime necessary evil that makes all that content on the consumer Web free?
It’s a great speculative debate, and today research firm IDC offered us some numbers suggesting that no, Internet advertising is doing just fine. IDC’s figure: total online ad spend in Q1 2008 increased to $7.1 billion, up 24 percent from the first quarter of 2007.
IDC analyst Karsten Weide sides with the bulls when he argues that a collective belt-tightening means that advertisers are going to ditch the expensive traditional media in favor of the cheaper and hopefully more engaging online channels.
“What happens is that the current economic crisis puts pressure on advertisers to save money and find more effective marketing channels,” Weide said. “Effectively, the crisis accelerates the shift of advertising budgets from traditional into new media.”
That may ultimately be the case, but the print-to-digital shift won’t be an overnight process. It seems likely that the immediate macro effect might be a decline in overall spending, which would then be followed by the shift that Weide described as advertisers assess and regroup.
But for the sake of sustaining all the content and services that are making our Web the hub of “free” content that is becoming, I like IDC’s numbers.
Even with overall ad spending (all media) in danger of declining by as much as 7 percent this year, IDC looks for quarterly increases in online spending of 15 percent to 20 percent.
