The New York Times ran a vague and contradictory article today about the display market’s behavior during a recession. Particularly, how ad networks will fare. The main points were:
1. The display market is the first online ad market to be hurt during a recession.
2. The online ad market shows some big companies growing and some shrinking year over year.
3. The online ad market might grow during a recession due to its measurability.
4. Some advertisers might spend money with “other” sites, both big and small, in order to get more out of their online spending.

I am not sure what the conclusion is from these points.
My thoughts regarding this are a little contradictory too, but let’s see if we can’t come to some sort of a conclusion:

1. “Ad Networks” is a generic term now for any large display company including the portals. If you strip the definition down to true ad networks, they are typically still growing (for example, AOL’s Platform A rather than AOL as a whole and of course Google.)
2. It is true that performance advertisers could spend less on display and keep their search budget intact during a downturn. However, Jupiter forecasts growth in display because the market is still not mature, so the general increase will outweigh reallocation by current advertisers.
3. Advertisers will move their budgets around and around the web, forever. Ad Networks serve a huge percentage of all of the display ads shown online, so even if advertisers test smaller sites, or different sites, they could not possibly make enough spot buys to equal the sheer volume they can get from one or two network buys. In addition, networks represent the most measurable portion of display advertising: therefore it is the most immune to economic downturn.
4. There is a huge increase in inventory, causing rates to go down. So some large advertisers have been able to spend less and get what they used to get.
5. Some big players, such as financial services companies, are not spending what they used to.

Jupiter has always been conservative in its forecast for reasons just like points 4 and 5. So we believe that the opportunity for growth still exits. In other words measurability and general bargins for the volume you can get will outweigh the volatility of external economics.