“It’s not surprising that it’s been trending down, but what is surprising is the size of the drop,” says Rajeev Goel, president and co-founder of PubMatic. “What we don’t know yet is whether the trend is due to increasing capacity on the supply side, or to the fact that the economic malaise is beginning to find its way into the online ad industry.”

Well, Im pretty sure I can tell you what has caused it.  Firstly advertisers are tightening their belts, no risks are being taken in such an uncertain time.  And secondly, they are channelling their ad spend into channels with a better return, like paid search and natural search engine optimisation.  A recession is no time for elaborate brand awareness campaigns, it si a time for keeping things tight, keeping profitability solid and riding the storm.  There is a time and a place for online display advertising but unfortunately for publishers, now isn’t it.

The net affect of this is with less advertisers booking space, and those that do driving a hard bargain, publishers are forced to take what they can get, and sell of the remnant inventory cheap.  There will still be exceptions to the rule, but not too many, and most advertisers will be driving a hard bargain for anything they do buy.  Good news for the media buyers (if your clients still have a budget that is!) but not so good for the publishers.

However, when affiliate marketing is done correctly, it should be guaranteed return on investment, with zero risk to the merchant company.  So if you were a marketer, looking for the best place to spend your budget in a time of uncertainty and increasing pressure to perform, where would you turn?

The volume of business is never going to be on the same scale as other media channels but when you are just looking to cut costs and keep a business ticking over that isn’t necessarily going to be your biggest concern.  So maybe affiliate marketing is going to see a bumper period as the recession continues.  It is certainly a good time to be pushing the “no risk” message that only really affiliate marketing can truly tout.  Before jumping in feet first however you must ensure you have a sound affiliate strategy and the correct quality assurance system in place to ensure you avoid some of the common pitfalls associated with affiliate marketing.