Last Updated Jul 26, 2009 8:45 PM EDT
The recession, duh. But it's less obvious than that. As late as last November, web-based ad agencies were reporting revenue rises. BNET advanced the argument that web advertising might skate through the recession unscathed.
That turned out to be wrong, as Q4 showed that web advertising behaved the same way as offline advertising does: Clients pull their money in hard times.
That does not bode well for ValueClick's Q2 2009 results, due in eary August.
But why did clients pull their money from the web? In theory, when clients are faced with cuts from the corporate finance office it makes sense to remove budgets from expensive, old, unmeasurable media and either preserve or increase budgets in cheap, new, measurable online forms -- as long as the aggregate budget declines.
Clients didn't do this. Instead, they seem to have taken the ax to everything, as if it were easier to calculate an across-the-board 10 percent cut rather than sit down with the spreadsheet and figure out what was more productive.
BNET asked Zephrin Lasker, CEO of online lead-generation Pontiflex (clients include Kimberly-Clark, Blockbuster and the Obama Campaign), what he thought was going on. He said:
There's culling across the board and it's completely indiscriminate.
So much media buying is on a relationship basis despite the automation.To conclude: The recession has been a key test for online advertising, a test in which the sector should have been able to demonstrate its efficiencies over traditional media. But for some reason, the sector has failed. Whether this is because clients couldn't be bothered to make tough choices or because the medium itself just isn't effective enough yet, is another story.
- See BNET's previous coverage of ValueClick:
- JP Morgan: Web Ad Economy Could Recover by End of 2009
- ValueClick Q1: No Growth to Be Seen; 40 Jobs Lost
- ValueClick Execs Got $12.4 Million Pay Raise Despite Missing Performance Targets
- ValueClick Q4: Recession Arrives on the Web and It Ain't Pretty
- ValueClick Exec Publicly Crucified Over E-Mail Error
- Q3: As Traditional Ad Economy Sinks, Web Ads Still in Growth Mode
- Microsoft's New "Private" Anti-Advertising Browser Turns Out to Be Not That Private
- Gawker's Denton Sweats Over Decline in Web Ad Revenues
- Web Ad Economy Faces Recession -- Possibly
- Q&A: ValueClick's Ardis on Where Client Money Is Going