With gas prices predicted to reach $5 per gallon in the next few weeks, you have to wonder how the trickle-down effect of these prices will impact our industry. If people have to make a choice between refilling their car with gas or refilling their prescription, they are likely to spend the money on gas so they can get to work. Fewer refills mean less pharma revenue, which results in smaller budgets.
Portals like WebMD, Everyday Health, The Health Central Network and Revolution Health generate a significant portion of their revenues from the pharma industry and we are starting to see some evidence of an Internet advertising market that may be slowing down a little. Revolution Health announced in early June that they are laying off 50 people. This is in addition to the 60 that were let go last October. WebMD recently announced that their 2008 earnings forecast may need to be adjusted downward by as much as $8 million.
A study recently released by research firm IDC suggests that Internet advertising revenue in the US will
double from $25.5 million in 2007 to $51.1 billion in 2012, a rate that is roughly eight times faster than all forms of advertising combined.
Internet industry experts say it's actually a positive sign for Internet advertising when overall advertising budgets are cut. Marketing investments tends to go from media that have an ambiguous ROI to more accountable medium like the Internet where it's easier to determine what you get for your money.
Dan McKillen is CEO of the HealthDay news service