Is There A Backlash Brewing Against Online Advertising?

Online ad growth is slowing to about 19% for 2007, down sharply from the 30% plus of the last three years, according to eMarketer. Why? I mean, WHY?

This is a huge decline in the growth rate of online advertising and saying that it is still in double-digits is not mollifying. When the delta of this magnitude changes in a trend, you have to dig into the reasons. And I haven’t seen much beyond “oh, it’s temporary, it will rebound,” or “it’s still really high,” or “it doesn’t matter, it’s all going that way.”

eMarketer says the growth rate will rebound to 22.1% in 2008 thanks to the Olympics but that’s not much of a rebound and it extends the declining trend to another year. And remember, all of online advertising still comes to less than 6% of total advertising—about $16 billion. The growth rate is off a very tiny base. Slowing down that rate means the shift to online will take longer.

So, again, what’s going on? The quickest explanation is that all advertising is slowing—for print (that is for sure), tv, and online. Cars and tech appear to be slowing their ads. Anything connected to housing must be slowing thanks to the subprime crisis. That may also hurt financial advertising to a degree.

But a 10 percentage point drop in growth is very sharp and may suggest deeper factors at work. Are companies tiring of ad agency blah blah about social networking being the only place to be? Are they questioning the metrics touted by online agencies as not much better than the metrics touted by print and TV? Are companies finding their ads lost in the overwhelming flood of online information. Are they seeing customers getting actively angry at their ads being thrown in their face online? Is search played out as a space for advertising?

In short, is there a backlash beginning against online advertising that we are seeing in the sharp drop in online ad growth? Dismissing the eMarketer data as simply a short-term blip that can be ignored is probably a serious mistake. We need serious answers to the backlash question.

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