by Brian
Morrissey
With the online advertising
doldrums stretching on, the sector is assessing the fallout that last
week's catastrophe could produce in an already hard-hit
industry.
Today, DoubleClick (Nasdaq: DCLK)
joined the parade of companies warning that profits will come up short in
the third quarter. The company said it would dip further into the red, now
expecting to record a loss of 9 cents to 11 cents a share. The loss could
be as much as twice what DoubleClick previously expected.
"The tragic events of
September 11 have led to softness in both online advertising and software
sales," Bruce Dalziel, DoubleClick's CFO, said in a statement. "This has
diminished the outlook for revenues in our media business, and to some
extent in our technology business as well."
DoubleClick is expecting
revenue of between $87 million and $90 million, compared with the
previously expected range of $96 million to $102 million.
The company is not alone in
the troubles it faces. Overall, the advertising market, already
stagnating, has been hit hard by last week's terrorist attacks. Network TV
has led the way, losing a week's advertisements to the wall-to-wall
coverage devoted to the attack. Print has also been hit hard, as
newspapers scrambled to publish special editions without ads that might be
construed as inappropriate.
| The iVillage
Preacher
With his background in the cable
industry, iVillage CEO Doug McCormick is a convert to online
advertising, preaching its merits with the zeal of a traveling
evangelist.
And he's about to be in charge
of a company in the black. Although its revenues are much lower than
a year before, iVillage announced today that it would post its
first-ever cash profit in the third quarter. While this profit is
something of an unattainable mirage (iVillage, like most Net
companies, doesn't include so-called one-time charges and expenses
when it calculates profits), it still is an important benchmark
to proving iVillage's sustainability.
McCormick is sure advertisers
will flock to the online space in due time. Even during a downturn,
he thinks ads on the Net will get a second look from the big
traditional advertisers.
"Can I spend less on advertising
and get more bang for my buck?" he asks rhetorically. "I think this
will cause advertisers to rethink their media mix, which might help
the Internet."
But with just 5 percent of
the overall advertising market, the Web may need McCormick to keep
spreading the word.
|
On the Web, news sites also
pulled advertising, often to help their pages load faster as the sites
dealt with a deluge of traffic from a news-hungry public. At NYTimes.com,
the site went back to advertising on Thursday, posting ads from its two
largest advertisers, Nieman Marcus and Tiffany's. While some travel
companies did choose to pull their ads, Christine Mohan, a spokeswoman for
New York Times Digital, said the long-term effect of the catastrophe is
unclear.
"It's a little early to tell
right now," she said. "We do have strong relationships with our clients,
and I think you'll see more people returning to Web and print
advertising."
But with the travel industry
in disarray, online advertising will most likely feel the effects of
curtailed ad budgets from airlines and online travel sites. The week
before the terrorist attacks, travel ranked as the sixth biggest
advertising sector, as tracked by AdRelevance, Jupiter Media Metrix's ad
research company. The following week, its advertising had halved, dropping
it to the No. 10 slot. Web advertising's big three remains media,
retail, and financial services, which together account for around 60
percent of Web ad impressions.
Overall, AdRelevance
research shows that ad impressions remained fairly steady. But many of
those ads were converted into charity advertisements for the Red Cross or
Salvation Army. Even X-10, the bad boy of the online advertising world,
changed its pop-under advertisements to help victims.
Charlie Buckwalter, VP of
media research at Jupiter Media Metrix, thinks online advertising, while
certainly in line for more pressure from an uncertain economic climate,
might fare better (or at least not as poorly) as the overall advertising
market, which is expected to suffer broadly. Pointing to the
bargain-basement prices that online ads are now sold for, he said, "A case
can be made that online ad activity will certainly be impacted by a
continuing downturn, but to a lesser degree than offline advertising
activity."
IVillage CEO Doug McCormick
echoed this sentiment. "The advertising business was somewhat under
pressure to begin with, and I haven't really seen too much of a short-term
hit to our advertising," he said. One of the most harped-on weaknesses of
online advertising--its unobtrusiveness, compared with media like
television--might help it in grave times, when people's minds are on war
and the missing.
"If people are coming to a
website, you don't have that interruption," McCormick said.
Teen site Bolt's CEO, Dan
Pelson, said online advertising's challenge is pretty much the same as
that facing the rest of the economy and the country: getting back to
business after unspeakable loss and grief. "The main problem is
uncertainty," he said. "Anything as dramatic and devastating as [the
attacks] will only add to that uncertainty. The question is how strong are
American businesses, and how tough we are ourselves with getting back
to business."
Feedback: [email protected]
