In response to a number of pings regarding our visibility into 2009 advertising trends, we decided to document what we are booking for the year.
The most important news is that our directly booked deal flow for ‘09 is up 30% over this time last year. The four-part explanation for the increase in a downturn is we (a) are part of an up-trending medium (b) reach a tightly focused demographic (c) have long-standing agency relationships and (d) have a track record of over-the-top engagement metrics.
Up 30% or not, the upcoming year will be very difficult and it’s critical all online publishers are ready to move beyond the banner and focus on custom integrated brand campaigns that give advertisers interactive exposure to precise demographic targets. The banner is not dead, but it’s becoming increasingly insignificant.
In fact high-end highly differentiated directly sold inventory will be critical this year to small and medium publishers. Last year ~17.5% of our monthly revenue came from high-end ad networks but this year we’ll be lucky if we can get 8% from the hurting networks. Advertising-based publishers will sink or swim this year based upon their volume of directly sold ads - or have to find new revenue streams - as network ad revenue is only going to be able to float the most e-fish-ient of boats. 2009 online advertising spending forecasts are still expecting at least nominal growth in 2009, but there is theoretical dissension.
Here are the specifics of what we’re seeing in each major ad sales category.
Direct Sales:
On top of the increased I/Os mentioned above we’re also seeing an increase in overall RFP flow. The Fortune 500 companies that we work with (predominantly household CPGs) have demonstrated little or no concerns about the financial downturn. A majority of our ’09 deals closed after Dec 1 and most of the RFPs came after November 1.
While the high-flying estimates of increased online ad dollars have fallen sharply they are all still showing growth of some sort. Pity print media and to a lesser degree television, but the writing has long been on the wall. Customers time spent online is increasing exponentially and the advertisers are following them there. As much as advertisers trust TV and newspapers gives them results, they all love the trackability of online campaigns. (However see the dissenting opinion)
Even further, within online spending, there’s a clear trend of advertisers from general audience to highly differentiated demographically focused properties. You’ll want to be ahead of that move.
High-End Ad Networks:
The bottom has pretty much fallen out of the large-scale high-end networks. There is still lots of money here, but the networks are reducing publisher rolls as fast as they can. There is still good money for the tightest-fitting publishers, but the bubble is bursting here because the networks can no longer afford to guarantee payments to reserve inventory for advertiser dollars that are shrinking.
Right and left there are concerns that the hefty contractual offerings by Google and Microsoft to control top publishers ad inventory will also be renegotiated.
So like most everyone else, this is a hit in our bottom line and has left us to fill-in our remaining unsold inventory with base advertising networks.

ROS/Bulk Network Advertisers:
January eCPMs numbers are so far down it’s laughable. December hung on and in our primary text and display network ad provides we were getting $0.40-$0.50 eCPMs we always got. But intel from the inside has confirmed we should not be griping about the $0.18 - $0.30 eCPMs we (and likely everyone else) are getting this month. Nor are we going to forecast anything better anytime soon.
This could be considered devastating, but there were so few web publishers that were profitable just from network ads alone, that I doubt we’re going to see many companies go from treading water to failing because of 50% or more rate drops.
As you can imagine we will be putting all our effort into direct sales of deeply integrated brand campaigns,. Not only because that is where all the best advertising money will be in 2009, but because that is where the best advertising money has always been.
[End safe crossing photo by cwalker71.]