The U.S. economy has likely been in recession for a year, and tech companies have been bracing for a big slowdown in growth. But the fact is that revenues for most Internet-based companies haven’t dropped yet. Amazon, in fact, was able to issue its annual “best year ever” press release the day after Christmas.
That’s all about to change, at least for content sites, starting this week. 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.”
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.
Some of the companies that survive the next few months will be leaner and stronger when this ends. That’s the upside. But everyone is cutting the fat, and your boss just may think you’re expendable.
Anyhow, on a more upbeat note, guess the movie the image is from, first comment to get it right gets a TechCrunch tshirt.
Thelma and Louise?
no.
How could you miss that?
Your no geek!
You get a timeout for misusing the Internet. j/k
Happy Holidays!
Thelma and Louise
Star Trek, the new one coming out next year.
bingo. expect an email.
mike, you should have sent the t-shirt with me to tokyo… just had coffee with jon (yongfook) last week. small world.
Mission Impossible!
Miserable news. Damn it is 1am and reading this makes me want to jump out of bed and start updating my resume. Argh. 2008 sucks. I hope 2009 can be better.
no, 2008 was fine. 2009 is the bad ending.
surely you mean 2010
What is TC expecting? 50% seems extremely pessimistic imho. Sounds like people’s fears are getting the best of them.
Thelma & Louise! Send me my tshirt now.
Sorry didn’t read your response above.
Duel then?
Yongfook is right, it’s the Star Trek movie coming out 05.08.09: http://www.startrekmovie.com/
P.S. Yongfook, congrats on the t-shirt man!
Surfed through hundreds of google images for the answer with the file name car+cliff and other combo’s but i guess the winner is already here
BTW its bad to know the upcoming downfall , i expected that the revenues would go up from jan as christmas was a economy downfall month + holidays month , didnt expect this for the next quarter
Everybody is talking about the bleek 2009. I hope things would change otherwise and bring us a good surprise.
Back to the grind, the is the best time to kick ass. Reach for the vines while your heavy competitors drown under their weight in the economic quicksand.
For companies like Google they have been forced to pullback and play their conservative hands instead of innovating. RSS ads instead of 3D worlds. A window just opened back up and all the players in the 3D world space just gained 5 years back. This is stuff dreams are made of, this is what recessions enable. It gives the little guy a chance.
Amen. And that example you picked out of RSS ads instead of 3D worlds is wonderful.
The outlook is bleak, indeed.
But then, what can we do about it? On the upside, perhaps it’s time to advertise to content sites, as they probably offer more perks for the same price tags.
My 2 cents.
there is still money to be made.
So – do you guys want to share the revenue predictions for TechCrunch?
I woulda said star trek. I was just not up that late!
Yea…u just managed to be up…later…
The picture is from an upcoming movie about the life of locator guy who, upon realizing that his domains are worthless, drives a car near a cliff and then ….
Coming soon to a cinema near you.
CliffLocator.com
Perfect
worthless to monkeys…..priceless to a creative genius. get some sleep kids.
GeniusLocator.com – some like it smart
Mike should temporarily ban the world Locator from being posted in the comments section. This is crazy.
Are you expecting a 50% revenue slowdown on TC as well Mike? From the looks of it TC is exactly the type of site you refer to in your post.
the car would be going straight if it were thelma and louise (or, apparently, a content site owner)
If media power houses like TC start saying ad revenue will go down, then the advertisers will use it to bring down prices.
Tsk Tsk, you get what you wish for. I remember you saying that a slowdown would be good for Silicon Valley.
Well, you got it.
I am sure you are regretting not selling out to CNET for $10 million when you had the chance.
If he turned down a buyout offer from CNET, it looks like Arrington is the biggest fool. I guess Techcrunch is damaged goods now.
No one likes sloppy seconds.
If an offer was indeed given I am sure it was over $10M. I am sure they could get that now…
I guess this means advertising will drop, being at both ends of the stick… not sure if, overall, this is a positive or negative development. Now is a good time to develop mindshare though but those who visit may not have money to spend. Hmmm…
Jon
http://WoodMarvels.com – Create Unique Memories
Mike, do you include Youtube, Hulu, Vimeo and others in “content sites” ?
I guess sites like YouTube are also ‘content sites’ as you can find info about specific things on sci and tech + others. In fact, it’s like a mirror image of Wikipedia. Here someone is talking and showing you the things.
companies that are basing their business models primarily on display advertising are probably on somewhat shaky ground anyway, unless they’re just absolutely huge (and even then, still questionable).
expect CPC & CPA models to become more prevalent, and a return to Freemium / Subscription models as the default for Web 2.1 companies going forward.
Mike, I am interested in your response to Pierre’s comment as well. Would this effect regular video sharing sites, if so, what about premium video sites like hulu, openfilm, etc?
Yes, there’s a lag. But sites that rely on revenue are going to start to earn less.
Maybe the advertisers should read this post. Sheesh, I’m looking for display advertising right now and prices are still stupidly high. Guess I’ll wait awhile and see if this Great Slowdown materializes.
- Curtis
http://ShipItOnTheSide.com – Learn to ship profitable software as a side job.
Do not expect your t-shirt too quickly.
I won the last contest a few months ago (PicWing) and have STILL not received mine
Hey Mike – what’s up? If you want to maximize your ad revenue, perhaps you should look into the quality of TechCrunch? Ignoring fans is not the way to go.
Mission Impossible II? (Or whichever one it was that had the lovely Thandie Newton in it.)
Drops from what exactly? Q4 or Q1 from last year. If it’s from Q4, which seems to be what’s implied in the article, then there’s nothing surprising about that at all. Nor is that particularly bad news. Q1 is always a slow quarter with a double digit drop from previous Q4.
I have to agree..this news post doesn’t make it clear if this 50 percent drop is year-to-year (which would indeed be bad) or Q4 to Q1 (which isn’t nearly as bad).
TechCrunch…you should change your name to the “Harbinger of Doom”
Times like this are an opportunity for new models and services. I am sure many are working out on innovative ways to generate revenues.
Recession is an opportunity that you shouldn’t miss.
Regards
Girissh
Yeah yeah yeah doom and gloom arrington. Fact of the matter is buyers will spend less on CPM and CPC and traditional media buys, but will spend MORE on direct sale buys such as affiliate networks and individual CPA buys that produce immediate ROI.
As usual lazy publishers that rely on AdSense might get the shaft but even that won’t be so bad because of affiliate marketers buying up space on the content network. Smarter publishers that replaced AdSense long ago with the affiliate ads that people were buying on their site should be fine. Quit bitching and whining and get back to work.
finally an article that is not about Twitter or Loic or any of the 250!
Yeah! cheap inventory…
RE: the Thelma & Louise pic.
Do you license any of the images you use and post on your site?
Umm, it’s definitely an image from the 2009 Star Trek trailer (which was friggin awesome).
Come on Mike. “everyone is cutting the fat” ?
There’s lots of fat cutting going on, but not all of us are doing it. Some of us are increasing our spending – we can get great talent easier than ever before. And our competitors are weakening, which means it’s time to strike…
I run a company that manages a network of content sites, and we’re expecting Q1 2009 to exceed Q1 2008… so I find it hard to believe that EVERYONE, across the board, is down.
Mike, you’ll be happy to hear Dogster, Inc.’s 2009 revenue will match or pass our 2008 profitable numbers.
We already have $1+M in signed I/Os for 2009.
Large brand advertisers are still buying 2009 inventory at no perceptible decrease. As far as our filler network ad revenue goes (which is a crappy way to make a big profitable business in the first place) we’re seeing the same ~$0.40 eCPMs as it ever was. If that drops to $0.20 I’m not sure how many good company’s bottoms lines that will turn bad.
Selling your advertising directly to tight demo is definitely not going to see a 50% drop. Might not even be a 1% drop if your advertisers aren’t autos, financial services or VC funded start-ups.
That’s awesome Ted!
We are feeling the same way about the education sector (which actually expands during an economic downturn). No price changes for ads on LearnHub.com.
Yes, advertisers will need to cut back – but not turn off advertising & marketing. They need to become more efficient with how they allocate their marketing dollars. Realestate search engine http://www.Roost.com is a great example – we’re seeing a 5x increase in IO’s from Dec-Jan.
all signs on our end point to a nice big boost in Q1 09. could be that our volume is too low to be considered a good data set. however, one thing that is true is that marketers are just getting smarter about where and how they spend. niche networks like ours will benefit from these smarter marketers, for sure.
I am sure this downfall will not fully affect websites which serves health related content as health care sector should hold up even in recession.
I run a company that manages a network of content sites, and we’re expecting Q1 2009 to exceed Q1 2008… so I find it hard to believe that EVERYONE, across the board, is down
Umm, it’s definitely an image from the 2009 Star Trek trailer (which was friggin awesome).
I woulda said star trek. I was just not up that late!
Valuable thoughts and advices. I read your topic with great interest.