Ad watch – display deteriorates, but still forecast to grow

Techmeme this evening charts the continuing decline in the online ad market, particularly in display, but the consensus is still that 2009 will be up from 2008.

First some background from mediamemo:

A year ago, the conventional wisdom said that the online advertising market would still grow in an economic slump because online ads were cheaper and more effective.

Quite so.  But as the economic slump continues to worsen it is increasingly possible that even online advertising will go flat to negative.

In a nutshell the consensus is that search will hold up best, but that display will come under more pressure.  But even with display the overall projections are well short of armageddon, from paidcontent:

Display deteriorates: While the category has been limping along since last spring, JP Morgan finds that sell-through rates continue to decline. Also, CPMs for premium inventory are flat to slightly down. Looking forward, Khan says CPMs are likely to remain depressed and sell-through rates will worsen. And so, for JP Morgan’s F’08 and F’09 U.S. display estimates, the analyst expects display dollars to hit $7.95 billion (11 percent Y/Y growth) and $8.45 billion (6 percent growth). That’s down from JP Morgan’s September call of $8.15 billion (14 percent Y/Y growth) and $9.43 billion (16 percent growth). For global display growth, JP Morgan sees F’08 bringing 14 percent Y/Y growth vs. its previous estimate of a 16 percent rise.

Although CPMs are on the decline:

Ad network optimizer The Rubicon Project reports that the average price for an online ad at “thousands of sites and 270 ad networks” dropped 11 percent in the last quarter.

The chat I have been hearing largely corroborates this, with a bit more emphasis on the downside. The talk is largely of a flight to safety, which in an online context usually means search and CPA, and of a very bleak upcoming Q1.  The only brightspots are a couple of stories of large shifts of budget from online to offline.