From Wall Street to Madison Avenue to Silicon Valley--the subprime credit crunch is taking its toll. Mortgage and lending companies are among the biggest online advertisers, so if they start cutting back on their ad spending, then it'll be noticed. Financial services comprised 16% of the total $17 billion in Internet ad spending in 2006, and that percentage was likely even larger this year.
How much of that ad spending was directly connected to the mortgage and lending market? Let's just say that THE LARGEST Internet advertiser in June was LendingTree. Number 10 was LowerMyBills.com, number 14 was Countrywide Home Loans, number 20, Capital One, number 23, Bank of America. (This ranking from TNS Media Intelligence and Oppenheimer & Co).
Where do they advertise? Everywhere. Google, which has the biggest share of Internet ads, probably gets the largest share of these ads: I've heard estimates as high as 50% and 60% from some analysts. And last week Paul Hickey from Bespoke Investment Group said on CNBC's "Street Signs" that mortgage ads were among Google's most profitable search ads. Yahoo, MSN, AOL, BankRate--they all get plenty of these ads.
How much will they cut back? We won't know until the end of the quarter when we see the balance sheets and how much Countrywide etc. spent on these ads. But a lot of the products the lenders were pushing--interest-only loans, subprime--they're unlikely to be selling as much now. So even if they continue advertising online, they'll have to reevaluate their strategy, and they're still likely to cut back.
Back to that question of how much? If things get worse, Rsck Sizemore from Multimedia Intelligence says they could cut back by as much as 50%. As is, he says he predicts they'll cut back 10-20%. Certainly not disastrous for the likes of Google and Yahoo, but certainly not too good.
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