More Online Ad Spending and the Coming Recession

Hopefully there isn't a coming recession — at least in the near future. But when it comes, traditional media will likely suffer. More on that in a moment. What prompted me to write this was TNS's increased online ad forecast, discussed in this ClickZ article:

The forecast sees growth on the Internet channel moving faster than any other . . . print media including newspaper and B2B magazines are expected to hold at about 19 percent of total ad volume this year.

"I think increased use of the Internet is taking away dollars from traditional media, notably areas like B2B magazines and local newspapers," Steven Fredericks, president and CEO of TNS Media Intelligence told ClickZ News. "It's not surprising to us. We see an increase [on the Internet] that continues to grow into double digits."

Growth on the Internet channel reached 19.4 percent in the first quarter. Display advertising on the Internet currently accounts for 6.7 percent of total ad spend. That's $10 billion out of the total $150 billion that's spent on advertising. While TNS doesn't track search, Fredericks estimates that search accounts for about 50 percent of total Internet advertising when considering IAB figures. "

If you add search, total Internet advertising is probably 12 to 13 percent [of the total ad spend]," he said.

The forecast sees no growth in magazines and newspapers ("holding at 19%"). This "holding pattern" is also true of print yellow pages, which is not discussed. But the "flat growth" of traditional media may become negative growth (newspapers experienced this in a couple of categories in Q1) if there's a recession.

Why? The Internet's "credibility" as an ad medium has now been conclusively established and consumers are increasingly using it in tandem with or as a substitute for traditional media. So here's what I said earlier:

When the next recession hits, companies may shift more dollars out of higher-priced media to the Internet, unless of course prices have reached comparable levels online. Even then the perceived efficiency and measurability of online wins the contest.

We'll have to wait and see if I'm correct . . .