I’m kidding, of course. Online marketing’s Chicken Little (a/k/a Henry Blodget) is back again with more “alarming” statistics to convince us that the online advertising market is crashing.
This time I hope you’re sitting down. Sandeep Aggarwal, an analyst at Oppenheimer, has cut his projections for yearly internet ad spending growth… from 26% to 25%!
Henry’s argument is that every big downturn starts with some smaller warning signs. Don’t focus on the size of the change, he instructs us, but the direction (down) which is “notable.” How about the overall direction of the market – UP by a staggering 25% year-over-year? How many other industries of this size are experiencing that kind of growth? Why isn’t that even more notable?
2 responses so far ↓
1 Henry Blodget // Sep 14, 2007 at 3:39 pm
The growth of the market is obviously important when comparing to other media, potential recessionary impact, etc. What is important to this particular point, however, is the change in trend of analyst revisions. For five years, they’ve gone up. Now, this one, at least, is headed down.
I think the mortgage disease will spread to other sectors and that this will eventually, at the very least, curtail the growth rate of online ads (which will feel like a recession to most people in the business). I’m not calling for a “crash” or yelling to everyone to “GET OUT!” I just think the trend is changing and we’re entering a typical cyclical downturn.
2 Jon Kelly // Sep 14, 2007 at 4:00 pm
Henry, thanks for your response. I understand your point, I just think that the data you are using are not very strong. Being an analyst, I understand that it is your job to get the jump on trends and see them before they are clear to everyone else. That said, I can’t help but think that you’ve made too much of the data that we’ve seen so far in the wake of the mortgage/credit problems. At the least, I think it’s fair to say that the medium to long-term outlook for online ad spending is still very positive given the success of the channel against other direct-marketing alternatives.
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