No Improvement for ‘Standard’ Online Advertising

No Improvement on Horizon for ‘Standard’ Online Advertising

A slow-to-no growth forecast in the US for “standard” components of the interactive advertising market - such as banner, display and pop-up ads - is not cyclical and shows no signs of improving quickly, even if the nation’s economy starts to move upward and out of recession, according to a forecast report from Borrell Associates.

Though the report projects that overall 2009 spending on traditional, offline media will decline 1.4%, and spending on interactive will increase 7.2 %, it notes that these figures do not tell the whole story.

In fact, 2009 will be the first year since the start of century in which banners, pop-ups, and interactive display advertising overall will show little or no growth, and may likely decline.

For local interactive media, the big slowdown began a year earlier than Borell initially anticipated, magnified and accelerated by the credit crisis. The spending levels by local advertisers - which grew at a frenetic 47% this year - are expected to slow to a paltry 8% 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, the report said, adding that as new advertisers move to the web, they will be less enthusiastic about spending their newly-shrunken ad budgets on traditional formats that they perceive to be less effective.

Future dollars are likely to be spent on other forms of interactive advertising, such as email, paid search and streaming video - which is expected to see the biggest spending growth, according to Borrell.

The report, “2009 Outlook: Big Slowdown Begins For Interactive Advertising,” which is available for purchase, includes national forecasts for US media revenue and spending, detailed analysis of the credit-crisis impact on media revenue and spending, and projections for growth and spending on promotional advertising.