Whither 2009 Online Ad Budgets?

From where I sit, it appears that the online advertising business has not yet fallen off a cliff. But what happens when ad buyers start spending 2009 ad budgets instead of working off the end of 2008 ad budgets that were set in a different economic environment? That’s a question I’ve been pondering for months and have mentioned once or twice on this blog.

Yesterday, I saw my friend Andy Monfried, founder and CEO of social ad network Lotame, had done a quick twitter poll on the subject. I decided to follow his lead and do the same:

twitterpoll: agency, mktg & ad sales
ppl replies only pls: will ONLINE ad budgets in 2009 be flat, up, or
down from 2008? tag w/ #2009budget

I got 16 responses that were tagged #2009budget and a few more replies directly to me. Here’s the summary of the replies.


So it seems that most people working in the online ad business are expecting online ad budgets to be up slightly in 2009. I tried to quantify everyone’s comment and then I took the average of all of those guesses and it works out to be about up 2%.

It’s worth noting that there are a few people who believe online ad budgets will be down pretty large amounts in 2009 and it’s also true that several of the people who commented were more specific about the ad budgets they were talking about. One area that is clearly more healthy than the entire sector is health care related online advertising which is expected to have a strong year.

And it’s also worth noting that words like measurabe, ROI, search, and CPC were all cited as stronger growth areas. I think it’s pretty well understood that money is going to move from less measurable (branding) to more measurable (remnant banner and search).

It’s not entirely clear where emerging forms of media will come out in 2009. This includes all sorts of engagement oriented marketing and of course, social media advertising. I suspect if it’s not proven to achieve key performance metrics, it’s at risk in 2009.

Anyway, this exercise was very helpful to me. I’ve thought for a while now that the mantra for 2009 is "flat is the up 20%" and that appears to be the case in online advertising too.

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Comments (Archived):

  1. Wesley Barrow

    Thanks for collecting those thoughts.I will go one step further to say that from a sales perspective at a white label social media platform, our services are being carved pretty aggressively into the Q1 2009 budgets, whereas that hasn’t so much been the case for the end of 2008. Even though dollars are shifting away from branding, we are finding that agencies are still being told to move forward with experimental and engagement based marketing, and that Q1 2009 will be when these plays start being made.

  2. AndyFinkle

    Fred I did not participate in your survey because you specifically asked only for those who control or sell online spend. Having said that I will add my two cents now that the survey is done… Only spend for 09 will be up 10%.If you had the opportunity to watch the congressional Detroit 3 hearings last week, there was a very interesting comment made by Waggoner (GM CEO) that somehow went under everybody’s radar. When quarried about their 09 expenditures Wagganer very specifically stated “We will move a SUBSTANTIAL portion of our ($500 million) advertising budget to online (Internet). The way he said it (so adamantly and definitely) made me almost fall out of my chair.I expect most major brands to make the shift in 09 to more accountable advertising spend, and this bodes well for overall for …..Internet advertising.www.twitter.com/A_F

    1. fredwilson

      Great commentI reblogged it on avc this morning

    2. PKafka

      Hey Andy, that’s a great nugget. Trying to find it in a transcript. Do you remember which hearing this was?

  3. Dan Cornish

    Predictions are worthless at this point. Could anyone have imagined oil at $25/barrel? “Exxon Falls on $25 Crude Forecast” http://www.bloomberg.com/ap…Who knows what is going to happen. Any analysis at this point has to take into account the economy will contract more. Then the massive amounts of capital being injected into the economy could ignite an inflation fire. Then China could stop buying T-bills. The point is no one knows.

    1. fredwilson

      I don’t agree. Online ad budgets for next year are being set right now orare already setSure they could be cut back during the course of next yearBut this process is important, it’s happening, and it’s worth trying to getvisibility into it

  4. Melissa Chang

    This data/experiment just reinforces the fact that any company supported by online advertising that already hasn’t begun to diversify their offerings (moving from banner-focused and branding-centric advertising) had better make the move to measurable ad formats immediately.There may not be online advertising growth in 2009, but there will be money out there for the companies that have the right offerings. Budgets are not growing, but the money will be shifting around.

  5. scotthoffman

    Fred, you got us thinking again yesterday and we conducted a Snap Poll to understand which was going to be more important “Brand or Performance metrics in 2009.” We found that the majority of planners next year are looking more heavily at Performance Metrics, but not at the same ratio that we would have guessed. The results are the top post this morning at http://www.lotamelearnings.comThanks for the inspiration again!

  6. MartinEdic

    I think we’re going to see a massive shift away from advertising in any medium and towards an engagement strategy across social media. There has been a pronounced change in the last few months on Twitter alone, a change I think is significant. Twitter is generating 50% of our leads and we’re seeing that the right message spreads very fast and in a very targeted manner. This has been enabled by the ability to follow keywords with services like Tweetbeep. A marketing group can build a following of power-users who then spread the message.The challenge is that you have to throw everything you think you know about marketing out the window- and the advertising industry is having a very difficult time doing that! Follow me @martinedic 😉

  7. rkorba

    I’ll buy the slightly up idea — secular ad spending (CPG, auto, financial) was not really online (where direct response and media ruled spending) and election/Olympic was negligible. That will be where traditional sees the big drop off. Online didn’t get fat on any of those in 2008.

  8. Roman Giverts

    While a twitter poll is “cute,” this is probably the most worthless data point I’ve ever seen in my life. If you would actually make a judgment based on what 16 people on twitter think… you’re an idiot.It’s not even worth mentioning what’s a statistically significant sample… this is just a dumb post by a smart person… happens to the best of us 🙂

    1. fredwilson

      That all may be true, but we do it all the time in our business. When we are thinking about making an investment, we call a bunch of people we know and ask them what they think about something, collect the data, and base some pretty important decisions on it

      1. Roman Giverts

        Sure, I trust the opinions of people I know too, everyone does. But there’s a difference between that and 16 screenames.

        1. fredwilson

          I know most of them

        2. mikeduda

          To your point, that mikeduda guy is a fool.

  9. Michael Diamant

    We have a nearly $1 million overall ad budget and we’ve slashed it by over 50% next year even with projected sales growth of 20%. Balance sheet building and generating cash – that’s the mantra for 2009. All variable expenditures have been slashed, and capex is at 10% of 2008 for 2009.