Is 2009 going to be the biggest year ever? Or will the recession and rising concerns about interent hackers cause the rising wave of online spend to finally crest and break?
The Interactive Advertising Bureau released figures last week which ran counter to predictions earlier ion the year. Online ad revenues declined in Q1 2009 compared to the year-ago period, according to the research (conducted by PricewaterhouseCoopers); internet ad spending was $5.5 billion for the first three months of the year, also off 5% from Q1 2008. This loss represents the first significant year-over-year decline since 2001.
Neither the IAB or PricewaterhouseCoopers provided breakdowns of the ad spend. IAB president and CEO Randall Rothenberg maintained that the results were nothing to worry about, saying the decline was a sign that digital media had gained its rightful place in the media mix and so isn’t “immune to broader trends.” He also insisted that Web advertising continues to weather the storm better than other media, and can actually gain market share during a downturn. “We are confident growth will resume as the U.S. economic climate improves,” he concluded.
Across the water is a different story. Online spending in the U.K. is expected to jump from $14.6 billion to as much as $34.9 billion in annual sales by the end of 2011, a 137% growth according to a new report by PayPal.
This projected online spending is equivalent to about $705 for every U.K. adult. The PayPal report (conducted by Experian) estimates U.K. retailing will rally well from the recession, and foretell online shopping to see its strongest year ever in 2011. Offline sales are also predicted to bounce back, although until the end of 2010, online shopping is the only area of retailing likely to record sales growth.
Approximately 4 in 10 online shoppers (8.7 million) in the UK think it is easier for them to budget by purchasing items online instead of offline, and 47 percent (10.8 million) believe their money goes further online. 7 in 10 consumers (33.6 million) say they research their options online before making a purchase (even an offline one), and 62 percent of online shoppers (14.2 million) think the best deals are available only online.
“As we all try to make our budgets work harder during the recession it is hardly surprising many of us have headed online to seek a better deal,” said Carl Scheible, Managing Director of PayPal U.K. “In fact, almost nine million of us now shop online at least once a week. Online shops have already seen phenomenal growth and by the end of 2011, when the recession is expected to be over, we’ll be spending at least one in every 14 pounds online.”
Tags: advertising, online spend, PayPal, UK