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An already beleaguered online advertising market suffered more blows after the Sept. 11 terrorist attacks on Manhattan's World Trade Center and the Pentagon. Although sites for major news organizations saw unprecedented spikes in traffic in the hours and days immediately following the attacks, many lost millions of dollars in revenue as they pulled ads down to accommodate the surge in use. And in the aftermath, analysts think online ad spending could suffer for months to come before turning around again.
At San Francisco-based financial news site CBS MarketWatch.com, top execs huddled as soon as the second plane struck the World Trade Center tower and decided to pull all graphics and ads to facilitate faster load times. Anticipating heavy traffic, "We opted to chop down the entire site and get straight to the story," says MarketWatch spokesperson Dan Silmore. On Sept. 11, the site had more than double the number of visitors compared to a normal market day, he says. The site remained entirely ad-free for a week.
Similarly, the online edition of The New York Times pulled all ads, temporarily eliminated online registration, and even modified the masthead in order to devote maximum server power to the site itself. It had 18.2 million visitors the day of the attack, between two and four times normal levels, but no ad revenue to show for it. (Other sites, including BusinessWeek Online, did not pull ads.)
LINGERING LOSSES? In some cases, advertisers and news sites together deemed particular messages inappropriate in light of the attacks. "Anything featuring airlines, air travel, or the New York skyline was immediately pulled," says Mark Harrod, CNN.com spokesperson. Now, in the wake of the disaster, campaigns with humorous or frivolous messages are being reconsidered by some Web-site managers. All told, the online advertising market may have suffered $25 million in near-term revenue losses, estimates Merrill Lynch analyst Henry Blodget.
The consequences could linger. Many companies are putting together preliminary plans for next year's ad and marketing budgets, points out Forrester analyst Jim Nail. "Uncertainties around what the attack will do to the economy and to consumer confidence could cause marketers to be very conservative in budgeting overall," he says. "And given that marketers are still uncertain about whether online ads work or not, they could be the first thing to go as belts get tightened."
The economic impact of the attack will likely delay the recovery of online advertising, says Blodget, who has lowered his growth forecasts for the 2002 online ad market from 20%-25% to 10%-15%. In a similar vein, online ad and marketing giant DoubleClick recently posted revised earnings guidance for the third quarter ending Sept. 30. Citing softness in both online advertising and software sales in the aftermath of the attack, the company now expects to record a loss of 9 cents to 11 cents a share, as much as twice what was previously expected.
CAUSE FOR OPTIMISM. So is online advertising doomed? Hardly. CNN.com's Harrod, for one, is optimistic about the long term. "We fully expect most every advertiser to return, both online and on-air," he says. In fact, online advertising does have one big advantage over print advertising: It is much easier to make good on ads that have been pulled online, where inventory is not necessarily bought and sold by time of day or day of week.
The surge in traffic to online news sites also gives cause for optimism to some analysts. "Consumer adoption of the Internet is not likely to go down as a result of this," says Jupiter Media Metrix analyst Rudy Grahn. "Mainstreaming of the Internet has been a by-product of this event -- and as long as consumer adoption of the Internet remains strong, there's reason to hold out hope for online advertising."
Further proof that consumers are online: More than 180,000 new users signed up for The New York Times when registration capability was returned to the site, 10 times the average. So although the online advertising market was unable to escape the devastation that shook the country and the world, here, too, there appears to be room to rebuild.
Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
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