Mortgage Advertising Downturn Pile On
by mstephens7
More evidence that the ripples from the subprime mortgage mess are spinning out and beginning to affect web destinations. I’ve been writing about this for the last couples of weeks (see Storms Ahead for Real Estate Sites and What the Subprime Mess Means for Real Estate 2.0). Others seem to be jumping on board.
Google sees Web search less exposed to mortgage woes | Business News | Reuters.com
A meltdown in subprime mortgage debt — made to borrowers with weak credit histories — triggered a global scare over banks’ exposure to a wide range of high-risk debt and stoked recession fears. The advertising and media industries are just beginning to feel the pressure, but some outlets may be more vulnerable than others if a wider swathe of financial services advertisers cut spending.
Critics such as Barron’s Roundtable member Fred Hickey are convinced that not even GOOG can avoid the impact of the credit mess that has rocked financial markets and prompted the Fed to slash the fed-funds rate by a half point. In a recent edition of his newsletter, High Tech Investor, Hickey wrote that Google’s advertising revenues are likely to take a hit next quarter and beyond.
Silicon Alley Insider: Google: Mortgage Ads Are Down — Except For Ours
But for argument’s sake, let’s say the ad slowdown will miraculously miss Google entirely. Even then, it’s still going to beat up a lot of Web players with second tier search businesses (IACI, MSFT, YHOO), or who are more dependent on display advertising (YHOO again).
Internet Outsider: Internet Recession Watch: Google Sees Ad Cutbacks
We continue to believe that we may be in the first stages of a cyclical downturn for advertising and the Internet sector–one that will affect not only start-ups and second-tier players but majors like Google (GOOG), Yahoo (YHOO), AOL, et al. Such downturns do not begin suddenly, and they are not instantly obvious (except in hindsight). Rather, as with the housing market, the environment changes gradually, over many months, with early signs slowly becoming a steady torrent of bad news.
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3 Comment(s)
4 Trackback(s)
- From Subprime Mortgage » Subprime Mortgage September 24, 2007 3:14 pm | Sep 24, 2007
- From Second Mortgage Bad credit » Mortgage Advertising Downturn Pile On | Sep 24, 2007
- From Advertising | Sep 24, 2007
- From Inman News Blog: Downturn ad spending: Zig or zag? | Sep 27, 2007
Matt Carter | Sep 24, 2007 | Reply
A more upbeat take from the Financial Times:
http://www.ft.com/cms/s/0/c7f37e10-6a31-11dc-a571-0000779fd2ac.html
“Online advertising spending is widely predicted to continue its strong growth even if a US economic downturn squeezes the advertising sector as a whole.”
The story quotes Eric Bader, managing director of digital at MediaVest, as saying online will gain market share on TV, newspapers, radio because “The focus will be on advertising that can be measured for effectiveness.”
Jillayne Schlicke | Sep 24, 2007 | Reply
Lowermybills.com, which produces the hideous ads shown above, is owned by Experian, the consumer reporting agency.
http://www.lowermybills.com/misc/company/index.jsp
Not only are these ads awful, they’re beyond deceptive. Yet, once the consumer clicks through, eventually a screen pops up with all the required Truth-in-Lending disclosures. The wildly successful banner ad pushing a $510K mortgage for $1400/month is a pay option, interest only, negative am ARM loan.
However, as long as mortgage brokers keep buying the leads generated by these ads, the more we’ll keep seeing them.
If it’s true that the ads are no longer generating revenues at previous levels, then what’s going on in our mortgage broker community?
Perhaps we already know.
Bran | Nov 5, 2007 | Reply
GOOG won’t take a hit, search engine leads are the highest quality, and the last place advertisers will stop spending. I spend millions online annually generating mortgage leads, and GOOG will be the last place i stop spending. Mortgage lenders will continue to grow their online spending, and GOOG will not take a hit. YHOO and other “Brand” advertising forums (MSN.com) will take a hit. The big one to short is IAC (lendingtree.com) and Experian (EXPN in the UK) … lead gen companies don’t get paid for clicks or impressions, but only for qualified leads, and with 50% of leads that were qualified last year, now worthless, they will take the biggest hit because of their business model.