Will online ads come out ahead after recession?

Some experts believe a recession could help online advertising gain against traditional outlets.

Jennifer Moyer, COO at Washingtonpost.Newsweek Interactive
Jennifer Moyer, chief operating officer at Washingtonpost.Newsweek Interactive Stephen Shankland/CNET Networks

SAN FRANCISCO--Online advertising may or may not be a recession-proof business, but some believe it at least will fare better than other ad channels during hard economic times.

"In times of recession, marketers move dollars from more traditional media outlets like TV onto Web advertising, where to some extent the CPMs (the cost per 1,000 ad impressions delivered) are lower, and the ability to measure ROI (return on investment) is much higher," said Jennifer Moyer, chief operating officer of Washingtonpost.Newsweek Interactive, speaking during a panel discussion at the Ad:Tech conference here.

Jeremy Wright, global director of mobile brand strategy at Nokia Interactive, predicted a similar shift.

"The thing we could well see is, a recession could expedite the shift from traditional spending to digital spending. Once those cuts are made in traditional media, we won't see those budgets go back," Wright said.

Jeremy Wright, global director of mobile brand strategy at Nokia Interactive
Jeremy Wright, global director of mobile brand strategy at Nokia Interactive Stephen Shankland/CNET Networks

The extent to which online advertising is recession-proof is a subject of much debate. Google's paid-click search business, in which the company gets paid only when people click ads accompanying search results, showed decreasing growth in click rates . The company argues that's because of quality measures that show better ads and consequently improve the revenue per click, but growth in paid-click ads is slowing in general , and the business is declining at Yahoo, Microsoft's MSN, and Time Warner's AOL, according to new market research from ComScore.

Moyer expected that a shift to online ad spending won't necessarily help branded media properties such as her own very much. The primary beneficiaries are more likely to be portal sites and ad networks, she said.

And overall, there are some categories in which advertisers are reluctant to spend money, she said. That includes financial services and travel today and likely job and real-estate ads in the future. Car ads also are likely to be hurt: "I'd theorize the credit crisis will catch up there as well fairly quickly," Moyer said.

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About the author

Stephen Shankland has been a reporter at CNET since 1998 and covers browsers, Web development, digital photography and new technology. In the past he has been CNET's beat reporter for Google, Yahoo, Linux, open-source software, servers and supercomputers. He has a soft spot in his heart for standards groups and I/O interfaces.

 

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