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Henry Blodget, the disgraced dotcom stock analyst turned blogger, provides futher evidence to support his theory (and ours) that fallout from the subprime mortgage crisis could hit companies like Google and Yahoo. Mortgage lenders and the companies that serve them are among the biggest buyers of online ads. If fallout from the mortgage crisis caused these companies to stop buying online ads, it could hit the internet sector and its flush stock valuations hard.
The latest figure from Nielsen//Netratings show that purchases by the top ten online ad buyers have indeed slowed from August to September. Blodget sums it up neatly:
Spending by Top Ten Web Advertisers, June-Sept (Nielsen, 000s)
June $278,404
July $279,850
August $323,814
September $290,246
There are caveats: The numbers reflect esimates (repeat - estimates) of spending on banner ads - not the search ads that account for most of Google’s revenue. Furthermore, August looks to have been an unusually rich month - the adjustment downwards from $323k to $290k could be a return to normal conditions more than a collapse in ad spending. Nevertheless, the fact that online ad spend appears to have reversed after many months of gains is troublesome. Next month’s figures will be an important indicator of whether this month’s drop in advertising by the top ten online ad buyers is merely a blip or a sign of rough waters ahead.
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