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Online Ad Spend a Sign of a U.S. Recession?

I’d like to ask you a question.

Does the growth of online advertising spend in the U.K. versus the U.S. confirm that our economy is in/heading for a recession?

According to a new study (via ClickZ) internet ad spend in the U.K. grew by 39% in 2007. In contrast, internet ad spend in the U.S. grew by just 25%–still impressive, but way behind our English cousins.

I know what you’re thinking. The online advertising channel in the U.K. must be immature compared to America–after all, they only spent $5.5 billion compared to our country’s $21.1 billion.

In reply, I’d point out the spending on a per capita basis (I know Jordan will be proud of me):

  • U.K. online ad spend = $90 per capita (total U.K. population approx. 61 million)
  • U.S. online ad spend = $70 per capita (total U.S. population approx. 300 million)

So, the British appear to be spending more per person and their spend is out-growing ours.

Can we use this as a measure of the health of our economy. After all, online ad spending is some of the most effective and measurable marketing–if U.S. companies are pulling back budgets here, what else are they cutting back on?

OK, over to you. What do you think?

  • http://www.searchengineoptimizationjournal.com Search Engine Optimization Journal

    This among many things is a sign of a possible recession. Advertising budgets are the first to go in many businesses… There’s no denying that our economy is definitely roughing it right now.

  • http://www.favbrowser.com Web Browser

    Um…

    If it increaseses by 10 from 100 to 110, it’s 10% increase.
    If it increases by 11 from 110, it’s ~9%…

    Hope you got the idea.

  • http://www.marketingpilgrim.com Andy Beal

    @Web B – what are you referring to?

  • http://www.bracingyourbrand.com Robert Kingston

    That depends.

    Is the Ad Spend focussed on the US market or are US advertisers reaching outside the US into international markets where people aren’t in a recession.

    I know for a fact that here in Australia, our dollar is almost worth as much as the USD these days. That makes it cheaper for us to buy from the US than it does from our own country – yep, even with shipping included.

  • http://www.bracingyourbrand.com Robert Kingston

    Ps. I was writing in reply to the question in the post: Can we use this as a measure of the health of our economy?

  • http://www.michellesblog.net Michelle Greer

    Isn’t gas in England around $7 per gallon? They charge by the liter there. If I had to pay that, I’d buy a lot more online too.

  • http://chasinggoogle.blogspot.com Elections guy

    This only means that America’s market is tight now.

  • http://www.chnswam.blogspot.com Chandra Mohan

    The US is, by all measures in for deep trouble in the coming days & months. But the powers that be resent to either accept it or take corrective action.

  • http://www.whatimnot.com Stefanie

    I’d want to see more examples before thinking of it as a good indicator. A lot of things are more expensive in the UK, so it makes sense that online ads might be, also.

    Maybe UK businesses are just faster to adapt to online methods. Maybe they have more computer users per capita. I really don’t know.

  • http://apokalypsesoftware.com/blog Alfonso Guerra

    The currency normally used in the UK isn’t the dollar, so the figures are completely inaccurate due to currency exchange rate fluctuations.

    Present the figures for the online ad spending in pounds, and we’ll have a more accurate picture for the relative health of the US market.

  • http://www.marketingpilgrim.com Andy Beal

    @Alfonso – it doesn’t fluctuate that much.

  • http://apokalypsesoftware.com/blog Alfonso Guerra

    http://www.x-rates.com/d/USD/GBP/graph120.html

    That looks rock steady to you?

    It looks like you’re just trying to find data that substantiates your beliefs rather than accepting the data you see.

  • http://www.marketingpilgrim.com Andy Beal

    @Aflonso – yeah, averages about $2 to the pound over past 120 days.

    Back at ya! ;-)
    http://www.x-rates.com/d/USD/GBP/hist2008.html