Internet Spending UP 18% in 2009

REPOSTED FROM KEN RADIO, AN EXCELLENT INTERACTIVE NEWS SERVICE

The deepening U.S. recession will cause worldwide advertising spending to shrink next year for the first time since 2001. Ad spending will slip 0.2% to $490.5 billion in 2009, led by a 6.2% drop in the U.S.. The U.S. ad market is expected to shrink 3.8% this year. Worldwide spending will rise 1.3% to $491.6 billion this year. This is about consumer confidence and consumer spending. More than any recession in the recent past, this will be driven by consumers. When consumer spending takes a hit, advertising takes a hit, according to Bloomberg.

U.S. spending on TV ads, the largest part of the industry, will fall 6.7%, and magazine ads will drop 5%. Internet spending will rise 18%, both in the U.S. and worldwide, as emerging ad formats such as Web video make up for slower growth in banner ads. The biggest hit in TV is the spot market, referring to ads sold shortly before airing, and not during the annual up-front market. What saved spot this year was the election. Advertising will fall less than the broader economy because marketers will need to maintain spending to protect market share. And according to a recent forecast, overall 2009 spending on traditional, offline media will decline 1.4%, and spending on interactive will increase 7.2%. 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. The spending levels by local advertisers, which grew at a 47% rate this year, are expected to slow to 8% in 2009.

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. Projections for US social network ad spending, anticipating that advertisers will spend $1.2 billion on social networks this year. Spending will reach an estimated $1.3 billion in 2009. Marketers should not write off social networks completely with a relatively small investment, companies can use social networks to cultivate relationships with customers who have already expressed interest in their brand or product.