Only a few weeks ago predictions for online ad spending were generally exuberant. It’s just one person’s opinion, but today’s interview in the Silicon Alley Insider with Carl Fremont is a little bit sobering. Fremont heads up media buying for Digitas, who purchased about $250 million worth of online inventory in 2006 prior to their acquisition by Publicis. He should know what he’s talking about, so when he suggests that (a) growth may in fact be flat and (b) there is simply too much inventory to sustain the increased CPMs others are praying for predicting, that’s surely cause for concern.
For me Fremont’s most significant point is about the impact of more publishers choosing an ad-supported model. His predictions aren’t incompatible with continued growth, but they may be incompatible with the hopes of publishers seeking to cash in on this growth. The real question, then, is not so much the rate at which overall online ad dollars will grow, but whether this growth will keep pace with the number of businesses whose survival depends on these dollars.
Anyone who’s building their investor pitch around general optimism about online ad spending growth should be prepared to explain why their ad-supported property will succeed in a market with too much available inventory.
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