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The Recovery is Here… Because Online Ad Revenue is Improving

Says who: David Silverman, PricewaterhouseCoopers

“While all segments of the media industry have experienced declines, online advertising remains resilient and is once again showing signs of growth.” [via Internet Advertising Bureau report]
Why it might be a false sign: Internet advertising, grew 1.7 percent from Q2 to Q3, but it’s still a really small piece of the overall advertising pie, less than 10 percent. What’s more, year-to-year figures actually dropped 5.4%, and while that’s not entirely surprising, it’s hard to increase budgets after you get used to subsisting on less. And ultimately, that could trickle down, to more and new types of media that could continue to fold. We’ve seen lots of major media hit by a readership and advertising pullback, but if online advertising doesn’t fully turn around, and websites aren’t diversified in their revenue, then we’re going to see more crashing.

Why it might be a valid indicator: All that said, if spending is increasing, it’s a reflection of confidence by companies opening their wallets. Corporate profits are slowly returning, Wall Street is strong again, and even though jobs are still going missing, employers are righting their ships enough to get behind marketing campaigns that are usually among the first on the chopping block. The fact that online video advertising, up 38 percent, continues to grow is also a good sign, since it is a new area and therefore somewhat riskier.

Our call: Not long ago, Google CEO Eric Schmidt called the recession’s end because of the indications he was getting from advertisers that they were going to be increasing spending. Since Google accounts for about one-third of the online market, they might have some good visibility. Combined with last week’s online ad report, we’re going optimistic here: Things are looking up.

Read more predictions: The Recession Will End…

Tags: advertising, economy, recession, recovery, The Recession Will End...