When down still means up: 4Q08 online ad revenue

The web is not television...or print...or radio. And so it's not surprising really that online advertising revenues might follow a different trendline...even in the face of the steepest economic downturn in modern times (insert ominous bell tolling here).

The IAB and PricewaterhouseCoopers (LLP, dontcha know) reported that 4Q08 online advertising grew at a 3% pace over the same period in 07 to $6.1 Billion (full year report here). And while 3% up when the overall economy was down by at least that much would be good, the subplot is even more meaningful: 

Revenue from search, which makes up the largest segment of the online advertising market, rose 13 percent to $2.8 billion. Revenue from banner ads, fell 4 percent to $2 billion. In fact, for the full year 2008 every other category of online ad format--rich media, digital video, email and sponsorships--was down over the same timeframe in 2007. 

Source: Pricewaterhouse Coopers/IAB

So What?

Certainly one quarter doesn't make a trend...at least let's hope not for 4Q08...But it does seem consistent with a theme: one of our Marketing Themes for 2009 even! (here). In addition to some of the previous postings on ad deflation and banner blindness, the challenges to traditional models moving online are simple: pay for performance versus pay for impression (or pay for annoyance, in the case of intrusive ad formats). In times like these, business performance anxiety among CMOs and other indirect-revenue functions can be...heightened.

Having hard data on what you got for your ad dollar--even if it's still indirectly correlated to sales--beats assertions about marketing impact...at least it will if you report to a CEO or CFO...or shareholders...or banks...or government stewards!

Ads online are good...when they perform for everyone involved. Useful and usable to prospects. Trackable results to advertisers.  Innovative pay-for-performance pricing models, like search ads or from vendors like AdFusion, will continue to gain share from advertisers regardless of the overall advertising revenue direction.  In times like these, performance model purveyors will gain share because they put their pricing model where their mouth is. I think that's a good thing.

Times like these indeed.