Analyst: Online Health Category Still Healthy

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Analyst: Online Health Category Still Healthy

Not every online sector is getting crushed in the economy. Health sites continues to thrive, even in the midst of the larger drop in online ad sales. In a report this morning on WebMD (NSDQ: WBMD), Citi Analyst Mark Mahaney notes that “we believe the online health category should be poised for double-digit revenue growth in ’09.” Why? Mahaney notes that there is a “flight to quality sites among Pharma advertisers” and says that “premium online health companies” like WebMD are increasingly selling long-term sponsorship ads instead of display ads. When WebMD reported its fourth-quarter earnings last month, the company said that it expected its revenue to grow 15 percent this year. Mahaney notes that that estimate, which he says is reasonable, “stands in sharp contrast” to the display-advertising outlook at other companies, including Yahoo.

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Joseph Tartakoff

@josephtartakoff Mar 27, 2009 12:30 PM ET

Posted In: Advertising, Media & Publishing, Health Content

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Bill

Just because WebMD has the foresight to lock Pharma into multi-year deals doesnt mean the industry is "healthy". There is not a single meaningful competitor to WebMD which suggests that the industry, if you can call it that, is in disarray. And by the way, a "flight to quality" is simply code for saying that Pharma agencies are no longer buying cheap CPM display ads at now defunct "social networking" sites.

The funny thing is how these "analyst reports" are just a regurg from what management tells them on the earnings call. Mahaney should just take the transcript of the call and slap his name on it. It would have the same amount of insight.

Mike Andrews

Consodering the ad growth in this space you still do not have a diverse group of players even looking at this top 20 list of health sites, you'll notice that the sites are controlled by about 6 publishers and the government.

http://www.ebizmba.com/articles/health