HealthContentAdvisors

WebMD: No Immunity to Ad Pullback

• Posted April 24th 2008
• by Janice

WebMD, the bellwether of the online health information sites, is suffering from ad pullback.  It was widely reported this week that WebMD has lowered its guidance for 2008 and its stock has been punished as a result.   S&P has downgraded the stock to a sell and cut its target price to $23.

Concern about lower-than-expected pharma advertising was a major factor in the downgrade.  But, WebMD is not entirely dependent on online ads for its revenue, which mitigates the financial picture. WebMD is also a leading provider of online continuing medical educations (CME) programs, and also provides private portals and custom publishing.

Some seem to relish bad news about WebMD and are quick to ascribe the slowdown in pharma advertising for WebMD to competition from newer players that offer less-costly ad alternatives. See, for instance, the comments in Silicon Alley Insider.  We firmly believe that ad dollars will continue to shift online.  However, the advertising sector is notoriously cyclical, and considering the current economic climate, the ad pullback is likely to prove contagious in the short term.