Michael Arrington apparently wants my morning coffee to wind up on the keyboard.
Display advertising revenue is going to fall of a cliff in January
according to a number of content sites I’ve spoken with who rely on
advertising for revenue. “Sales through December were mostly strong as advertisers used up their marketing budgets,†said one sales exec. But, he added, “there are few buyers for this next fiscal quarter, and those few that are buying are looking for steep discounts.â€Just how bad will it be? I’ve heard estimates of 30%-80% revenue
drops over the next three months from companies that serve a variety of
content (games sites, tech news, celebrity news, political news, etc.).
The median pessimism point is around 50%. The people I’ve spoken with
work at large public companies and small one-person blog shops.
Absolutely no one I spoke with said they expect an up quarter.
Translation: If you work at any sort of media outlet, there’s about a 50-50 shot that the next few months will involve putting the little plastic baggies on your hands and trudging to work down at Quizno’s to make sammiches.
According to Ad Age, the meltdown that started in newspapers (article headline: “Media Jobs? Depressing)…
U.S. media have cut 196,200 or 18.6% of jobs since employment in that sector peaked in the 2000 dot-com bubble. More than half the cuts (109,700) came from newspapers. Media employment fell by 3.1% (27,600 jobs) from the start of the recession in December 2007 through October 2008.
…is about to hit the ad agencies in a big, big way:
More cuts are likely; Omnicom Group did major cuts in December. While economists guess the recession will end in the second half of 2009, the U.S. job market — including the agency sector — could get stuck in another extended “jobless recovery.”
Investors have soured on the agency sector. Combined market capitalization of the Big Four agency firms — Omnicom, WPP, Interpublic Group of Cos., Publicis Groupe — in December 2008 was $23.4 billion, not dramatically above the June 2007 market cap of WPP alone ($18.3 billion).
Looked at this way, the newspaper contractions have been the “canaries in the coalmine” in the media industry, and the next 9 months or so are going to see a lot of other people sharing the fate of the ink-stained wretches. Which is not good news for newspaper people who are getting downsized, and who haven’t given a lot of thought as to what they can do next. All the prescriptions & nostrums that have been offered thus far – start up your own hyper-local news website & start selling ads to local merchants – are not going to be possible when said local merchants are closing their doors and/or eliminating their discretionary ad budgets.
I’m sure the coming months will hear wails & howls from the ad folks like those we’ve been hearing from the news side. However – like in the news business – those advertising professionals who are on top of the latest trends, and who have trained themselves to have multiple skills – they will survive.
Technorati Tags: ad revenue decline, newspapers crisis, online ad decline