The recession in online advertising, which began in the first quarter of 2009, continued into the second. Every quarter we keep track of the combined advertising revenues of the four largest Web advertising companies (Google, Yahoo, Microsoft, and AOL), which together represent the lion’s share of all online advertising revenues and is a decent proxy for the market as a whole. In the second quarter of 2009, their combined global ad revenues were $7.864 billion, down 3.4 percent from a year ago.
In economics, a general rule of thumb is that two down quarters marks a recession. Last quarter saw the first annual decline in advertising revenues of 2.1 percent. And the annual decline this quarter got a little worse. However, on a sequential basis compared to last quarter, it is actually pretty much flat (but still down 0.18 percent). So we now have two down quarters on both an annual and sequential basis.
Will this recession continue into the current quarter, or did we just witness a fundamental “reset”, as Steve Ballmer likes to call it. What that implies is that advertising revenues have been reset to a lower level from which they can once again grow. We’ll see what happens in the third quarter, but anecdotally I am hearing from advertising startups that the worst is behind us.
This may be wishful thinking, of course. But barring any new economic catastrophe, the advertising levels of the past two quarters seems like the new floor. But how long will it take to get up off that floor?
These numbers represent global advertising revenues, and include network revenues paid to affiliates through AdSense and Yahoo’s ad network. Google’s licensing revenues for Google Enterprise Apps have been stripped out. For the other companies, we include only the advertising portions of their online revenues as reported in their quarterly earnings statements.
Below is a table with all the numbers:
Online Advertising Revenues (in millions)
| 4Q07 | 1Q08 | 2Q08 | 3Q08 | 4Q08 | 1Q09 | 2Q09 | |
|---|---|---|---|---|---|---|---|
| $4,758 | $5,086 | $5,185 | $5,352 | $5,504 | $5,331 | $5,336 | |
| Yahoo | $1,590 | $1,572 | $1,587 | $1,563 | $1,594 | $1,383 | $1,378 |
| Microsoft | $860 | $840 | $840 | $770 | $866 | $721 | $731 |
| AOL | $620 | $552 | $530 | $507 | $507 | $443 | $419 |
| Total | $7,828 | $8,050 | $8,142 | $8,192 | $8,467 | $7,878 | $7864 |
| Sequential Growth Q/Q | 2.84% | 1.14% | 0.61% | -7.00% | -0.18% | ||
| Annual Growth Y/Y | 8.21% | -2.10% | -3.41% |
Don’t worry about Google.
Your AdSense will get ripped off, you are left with nothing ( why is this shit allowed anyway by European Union for example?)
And you can only dream about your green new Prius.
Don’t be evil by the way!
Work seriously, provide real content, stop thinking about pennies and google adsense or ypn or msn adcenter can be a killer source of revenue. If you dont make money through any of the bigger network why are they blamed? Its you the publisher who is a loser unable to make the max and if you really got the guys why not go for direct ad sales and prove yourself!
These Adsense/adwords % numbers should be public. Little amounts form big amounts if there are so many pages there.
I don’t have anything to do with Google. I don’t use it. I’m just a programmer, but I am amazed that they keep such things as a secret and are to milk off people such ways.
You seem like the type of person who visits digital point to give “advice”.
“hehe” has a point here, adsense is SHIT as of late. You don’t have to be a genius to understand that by having publisher share private, you can silently adjust the number to even out your falling revenues and keep share prices more or less steady.
Which is what google is doing now.
Edward Tufte would be having a fit over that last graph – it makes the situation look a lot worse than it is.
The revenue from Q2 2008 to Q3 2009 is down, what, 3.5%? Considering the state of other markets, many of which are down 30-40%, this makes online advertising look positively upbeat.
yadda, yadda, tell it to the folks who make Excel. Look at the scale, it doesn’t start from zero.
so, make it start at 0. excel isnt that hard to use.
wah wah wah. look at 1999-2001 and see if it rebounds. come on. better days are coming. time to invest
Learn to use Excel friend! The initial comment is correct. If you put this in context, the drop is not too bad.
Why oh why do most techcrunch articles read like horsesh!t if you turn your brain on while reading them?
Was Tech Crunch down earlier today? I was having hard time accessing it from east coast in US.
Yeah, it was definitely down here in the PDT as well. Is TC going to acknowledge this? They are quick to bash other sites for going down.
yeah, TC was down. Might be they had hard time finding “Crunch” about it…
Yes it was down. You can’t possibly be a regular TC reader and not know about Twitter. A quick search will show all the “is Twitter down for everyone or just me?” tweets. A regular TC reader should be smart enough to know how to tell if a site is down for everyone or just them, but that’s asking too much apparently.
s/is Twitter/is TechCrunch/
:s/twitter|Techcrunch/twitcrunch/g
I guess you are right but at moments you just wanna kick your lazyness to the forefront. Don’t you think so?
Since when does not knowing or caring about twitter have anything to do with being smart. Without trying hard you’re a poster boy of the disproportionate presence of the Asperger’s afflicted among the tech crowd. Pathetic.
I would love to see how online ad sales compare against all ad sales (tv,print). That will give you a better representaion of how online ad sales preformed.
Here you go Sam.
Online ads vs everything else: http://www.mark...lls-142-044344/
There’s also some data that shows online ad pricing was up this quarter. This TC posts uses the big networks as a proxy, which isn’t always the best way to gauge.
A “positive” report: http://www.mark...-h1-2009-044742
Compare these numbers to the revenue from TV, radio, newspaper, etc and I am willing to bet that online advertising revenue is looking pretty nice right now.
Social networking as an alternative to online advertising? That explains a small drop in revenues at least
Looking at totals clouds some interesting details. Here is a breakdown of the Y/Y numbers by company.
GOOG 16% 5% 3%
YHOO 0% -12% -13%
MSFT 1% -14% -13%
AOL -18% -20% -21%
Total 8% -2% -3%
So while the industry revenues have shrunk in the last two quarters (year-over-year), Google’s revenues have increased (5%, 3%).
The brunt of the drop has been borne by AOL (-20%, -21%), and then Microsoft (-14%, -13%) and Yahoo (-12%, -13%).
Another way to see this is that Google’s share of the market is growing. Because Google’s growth is slower than the collapse of AOL, Microsoft, and Yahoo, the industry looks like it is shrinking.
The trend for the individual companies might continue.
What does this mean? Advertisers are not as flush with cash as they were before so they are looking more carefully at their ad investments and are moving their ad spend from AOL, Microsoft and Yahoo, to Google.
Good analysis Asim – AOL is triple quarter down. I didn’t know AOL even had an ad network (don’t remember seeing ‘Ads by aooooooool’ on any website). Who are the suckers, spend their advertising budget there?
I agree that the economy has had a huge impact. But I also believe that advertisers are gaining experience. As newbs I see them running their campaigns shotgun style. Then refine until they are spending very specific.
It would be interesting to know if they are spending the same amount as they learn how to hit their numbers more efficiently.
no this is not what a recession looks like, I see it more as an end of the American financial system. No worries for me, I’m Poor. Rich people will feel the loss on a unprecedented paramount scale.
Facebook and twitter used as free advertisement instead?
Erick, is TC feeling the downturn also? I wonder if this is mainly affecting the big ones or are niche blogs less resilient to the crisis? (To some extend of course, everyone is getting hit hard)
Obviously TC is feeling it since the quality of the staff and the writing has gone way downhill in the last year. My guess is they are paying less per post and getting crappier content as a result.
The data leaves space for some wild speculation, based on the fact that Google is not transparent on the way it pays his adsense customers.
If the other ad networks have seen a big drop between 3Q08 and 1Q09 (4Q08 is less revelant, xmas session), this might imply that google could be reducing the money they pay to webmasters (adsense) to compensate the economic crush, embellishing the overall revenue number. After all, many adsense users reports a significant drop of income, and as they don’t share how they split profits noone would notice.
And, if google is paying less to adsense users. Will google revert to the previous payment structure or the change is minded to stay?
Suggestion: Let’s look at this on a 10 year scale and reset this conversation.
Its not only the guns suffering but each and every website that runs on a revenue through online ads is.Though there could still be no worry for people having great conntent that pays a lot worth of ads.
Let’s ask TC itself. How are TechCrunch’s revenues through advertising doing on a quarter to quarter basis?
Ads are pretty dead, both in print and online. But they’ll eventually return..albeit with a different rate set.
TC guys.. what wordpress comment plugin are you using?
advertising revenue is pretty soar right now, on any platform. best time to buy websites based on revenue!
You missed a key point, which is that in this downturn Google has stolen significant share from all the others you list. They are down from 4Q08 but only back to 3Q08 numbers. Google is still above their 4Q07 to 2Q08 numbers. In the past two quarters Microsoft, Yahoo, and AOL have all posted their lowest numbers since before 4Q07.
Please use a “0″ value in your axis and a logarithmic scale so that the proportions of the graph have more meaning. Thanks!
Ok, firstly the second graph is misleading at best.
Secondly, I think you should look up the definition of “recession” before writing about it. Recession is two consecutive quarters of negative growth. So the industry may be in recession now, but it didn’t start when you said it did.
Interesting insights. I am glad to hear that being an alumni from Yahoo. What seems to be aligned with this is that consumer spending will is up again:
http://www.weal...d-mintcom-data/
Erick, thank you for the super informative post, this is exactly the kind of info I’ve been seeking. regards!
I guess you are right but at moments you just wanna kick your lazyness to the forefront. Don’t you think so?