WPP's GroupM has reduced its forecast for headline UK internet ad growth dramatically from 20% to 4% for 2009. That's huge almost too huge.
It does temper this by saying that some of the fall is due to a maturing internet market and not all is downturn related, but still. The radical predictions for next year compare to 27% in its May forecast to 22% in 2008.
The report says that demand for paid search and online display is still good, but paid search growth has been slowing markedly across 2008 and display is subject to price deflation as more activity becomes cost-per-action or 'performance'-based. That's as it should be, CPA and CPP are how things should be done. Better news GroupM says is that premium display inventory, which includes pre-roll, high-quality publishers and portals; cost-per-thousand-based rather than cost-per-action, remains in strong health, but advertiser arbitrage between per-thousand and per-action chains their respective pricing.Premium display is typically used by larger brand advertisers, which means they are maintaining high profile usage campaigns and not cutting back online as some other reports have suggested.GroupM does not see any sudden recovery (saying only it remains possible) because it says consumer retrenchment is simply too deep to make this likely in 2009. However, like Sir Martin Sorrell (I recently blogged about how he expected a bounce back sooner, rather than later), GroupM does see some conditions are already improving. It points to the monetary and fiscal taps are at least open (by the US government and its $700bn bailout plan), even if the flow is sluggish. Overall online and offline, GroupM suggests that only the US is likely to shed more ad dollars than the UK, which is going to be hard hit (as if we haven't already seen this in the tsunami of media job cuts). "This has been a classic, hard-to-predict 'trend reversal' from our own springtime hopes of 3% UK media growth next year, with sentiment falling fastest alongside the grim September/October newsflow. Every medium is affected, and indeed nearly every country including the fast-growing BRIC/Next 11 as our forthcoming global forecast will show."
Gordon Macmillan
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