When Rich Antoniello, CEO of Complex Media, looked at his digital sales pipeline for the fourth quarter two weeks before the end of the third, he was ecstatic: digital revenue was on pace to double year-over-year. But in the month and a half that followed, advertisers pulled off the table 30% of what Mr. Antoniello considers "qualified revenue" -- revenue from deals on which, at a minimum, negotiations have begun -- compared with 10% in an average month.
Mr. Antoniello's company will still finish the quarter up 74% on digital revenue year-over-year -- good news by most measures. But online publishers are facing a weaker fourth quarter than anticipated as marketers take a cautious approach this holiday season
At Yahoo, brand advertising dropped off in the first six weeks of the quarter vs. the same period last year, according to an analysis by Macquarie Capital analyst Ben Schachter. He said high-margin custom brand ads accounted for 23% of Yahoo's home page in the first half of the quarter this year, vs. 32% last year. AOL also showed weakness, with just 19% brand ads.
With the all-important last quarter half over, traditional online publishers are suffering from marketers' conservatism in the face of global economic uncertainty and their focus on social media and new mobile formats such as smartphones and tablets.
"More of a concern is what is happening broadly at the portals. Are some of these dollars going to Facebook and YouTube? The answer seems to be yes," Mr. Schachter said.
Donnie Williams, chief digital officer at Horizon Media, said the fourth-quarter digital spending pullback has been a popular topic in his conversations with "everyone from Tier 1 publishers to video-ad networks." Mr. Williams said his agency has not felt the brunt of this slowdown because of its focus on adding clients rather than increasing budgets with existing accounts. He singled out consumer packaged goods and retail as categories where spending seems to be slowing.
Mr. Schachter's analysis found weakness in financial services, as well ad drop-off in daily-deals advertising. An insider at another large online publisher said the company has also seen softness in fourth-quarter package goods spending, and in consumer electronics and pharmaceutical categories.
Colin Kinsella, CEO for North America at Digitas, said his agency sat down with its big clients in late summer as stock-price fluctuations dominated and lowered projections for the end of the year. Mr. Kinsella said Digitas continues to see spending increases on mobile, especially search, as well as on social campaigns.
Broadly, ad spending continues to shift toward digital, but marketer caution is affecting the ambitious programs that can make or break a quarter.
"We continue to see share-shift toward digital but less of an appetite for experimental digital solutions and more focus on things that they know," said Wes Nichols, CEO of Marketshare Partners.
Offline, signs also point toward a weak quarter. In the magazine industry, where advertisers have to commit spending ahead of time, ad pages across monthly magazines' October, November and December issues declined 6.8% from the fourth quarter of last year, according to the Media Industry Newsletter. Spending in TV's last-minute "scatter" market is also expected to be weak, but that has much to do with marketers' buying more ad inventory ahead of time in the TV-buying upfront last summer.