The Social

Nobody's surprised: Internet-advertising revenues fell slightly in the first half of 2009, according to numbers released Monday by the Interactive Advertising Bureau and PricewaterhouseCoopers.

The trade group found that online-ad revenues dropped 5.3 percent to $10.9 billion year over year, representing a total loss of $610 million. That's an understandable loss, given how much the media business has had the wind knocked out of it, thanks to the recession. But the slide in digital advertising isn't nearly as dire, when compared to the overall ad industry, which fell 15.4 percent.

The IAB also brought up numbers from Nielsen indicating that online advertising is essentially flat--and that the only sector of the ad industry that is growing is cable television.

PwC partner David Silverman called online advertising "a vibrant, sustainable industry," and he reiterated that it's an "industry that really didn't exist more than 12 years ago."

There was not much talk about social-media advertising, which has made somewhat of a breakthrough in recent months: after much criticism that it would never be able to make much money, social ads got a boost from Facebook's announcement that it had reached a cash flow-positive status several quarters earlier than expected.

The social network, which now has more than 300 million active users, has been dipping a toe into virtual-commerce revenue streams but is still supported primarily by advertising.

For a company that's cutting costs these days, the annual holiday party is an easy target. But there have been fewer cancellations in the tech industry than one might think.

True, eliminating an evening of eggnog and sugar cookies won't help an ailing balance sheet that much; in the current financial downturn, it has a lot to do with appearances, too. "It's the economy, definitely, but it's also a lot of public perception," said Celia Chen, a New York-based event planner who runs the blog Notes on a Party.

"People don't want to seem like they're being gratuitous or over-the-top when their colleagues have lost their jobs. It's more of a responsible way to run your company," she said.

On the other hand, there's a delicate balance between appearing prudent in the face of hard times, and keeping employee morale afloat. Many tech companies are in trouble, but for the most part they are not in meltdown mode like financial services companies or in a continued downward spiral like print media companies. Perhaps because of this, event planners say they haven't seen the same cancel-everything attitude when it comes to tech companies that they've seen in other industries.

"In the financial industry, their budgets are significantly lower than last year. In the tech world it really depends on the company," said Nate Valentine, a partner in the San Francisco events firm Vintage415. "You're seeing companies that are new, emerging companies that are doing events that haven't done events in the past, because they have the budget (now)."

Things are very different in traditional media companies, many of which have acquired tech start-ups and recently expanded their digital divisions--they're hurting, badly. Hearst Publications, which shuttered three magazines, canceled its party. So did Viacom, which is rumored to have layoffs coming before the end of the year. But many smaller media companies and tech start-ups have never had a large-scale holiday party, and probably aren't hiring high-end caterers or renting out big nightclubs for open bars.

The appearances factor comes into play here, too: employees of some smaller companies say they haven't even heard yet about whether the holiday party is on the books or not, indicating that a few executives are still vacillating on how appropriate it would be to throw a company party amid layoffs. "I haven't actually heard either way yet (about a cancellation)," said a representative from one San Francisco-based start-up that recently cut several dozen employees.

"I can't see us not having (a party)," said an employee of one New York-based blog company that also went through a fresh round of layoffs. "It'll suck, but we'll have it, I'm sure."

For larger companies, scaling back a holiday party can be particularly appearances-driven because there's a good chance they've already paid for much of it. "If you're a really big company, you're putting a deposit down on a Christmas party probably in September, if not August, because you have to accommodate a large group and it's been allocated in the budget for the year," Chen said.

There are signs of cost-consciousness everywhere: Valentine said that recently a group of several dozen Google employees in the Bay Area had arranged for an open bar at one of Vintage415's venues without actually booking the club. In New York, news outlet The Daily Beast reported that Google was renting less glitzy venues for its Gotham holiday parties. (Representatives from Google were not immediately available to confirm the report.)

"They'll still find a way to celebrate," Valentine commented. "It's just a different way to celebrate."

Viacom, for example, canceled its companywide party as well as parties for big divisions like MTV Networks and Paramount. "All employees across the country are getting two extra vacation days in exchange," company spokesman Jeremy Zweig told CNET News.

One member of Viacom's MTV Networks said that he speculates individual divisions of companies may come up with their own smaller celebration plans. "I'm sure we'll have drinks somewhere, at some point," said the Viacom employee, "even if it's just my team."

But a bigger complication arises when it comes to companies that have traditionally invited clients, media, or analysts to holiday parties. Canceling a party to which non-employees, particularly non-employees with an indirect stake in the company, are invited, could skew perceptions about that company's health. Both Google and Facebook, for example, have already sent out the invitations to their holiday media parties, fairly low-key affairs at company headquarters where handfuls of bloggers and journalists show up to schmooze with executives.

That said, the image issues work in the other direction, too. Chen said that a new-media company might want to think twice before throwing a big holiday party where one of the goals is to get loyal advertisers nice and tipsy. "Advertisers, I think they want to know that the companies they're advertising in are fiscally responsible," she speculated. "I think advertising is taking a hit in its own light, so I think the general feeling is that we have to be respectful of what's happening with so many people being laid off. And people really admire companies that are trying to do the right thing."

In the end, it's a tough executive decision. Unlike, say, the financial services industry, there really is no clear-cut answer in the tech sector to the question of whether a holiday party should stay on, scale back, or get the ax altogether. But event planners agree: it's never a good idea to throw a party just to act like things are all right.

"It's very difficult to celebrate with your senior executives when you have to look your staff in the face and say, 'We just had to let half of you go,'" Chen said.

The financial crisis strikes again: Successful New York-based blog network Gawker Media will be laying off 19 of its 133 editorial staffers, according to an internal e-mail from publisher Nick Denton. The company will be additionally suspending its bonus payments to writers and editors, but will be increasing their base pay and making some strategic hires at the company's most successful blogs.

"With the savings, we are increasing base pay and hiring 10 new people on the most commercially successful Gawker sites," Denton wrote in the e-mail. "But I know that's scant consolation for the colleagues we're losing and for those of you who have been enjoying the bonus windfalls from breakout stories."

The bonus system at Gawker, a network of snarky and witty gossip- and culture-focused blogs that Denton founded in 2002, has provoked controversy and banter throughout the new-media world: the company pays most writers at a base rate but then adds a bonus for every thousand page views a single post pulls in. The bonuses will continue to the end of 2008, but have been suspended for the first quarter of 2009 at the least.

Equally controversial has been some of the blogs' own content, which countless pundits have criticized for being puerile, mean, and occasionally invasive. But in New York, where Gawker Media has been arguably the most successful new-media start-up story of the past decade, the layoffs can only be described as unfortunate and sad: its writers and business staff are valued members of the blogging community and Gawker Media's downtown offices have become a popular hangout and party space.

Gawker Media is still, for all intents and purposes, doing well. Advertising revenue and traffic are both up. Laying off staffers is a preventive measure, Denton said. "The credit crisis is clearly going to affect every sector of the economy," he wrote. "Advertising buys typically plunge after the Christmas shopping season, and 2009 is obviously going to be exceptionally difficult. We have to prepare for the worst, now, rather than when the worst comes upon us."

The cuts have hit the Gawker-owned Silicon Valley gossip blog Valleywag hard: editor Owen Thomas wrote that he has laid off 60 percent of his editorial staff, bringing its total number of bloggers down to only two.

The new hires will flesh out the teams at some of the company's more profitable blogs--feminist-focused Jezebel, sports blog Deadspin, gaming title Kotaku, and the most recent addition to the company's network, sci-fi blog io9. And former W magazine staffer Gabriel Snyder will take the helm at flagship title Gawker, which Denton himself has been editing since a handful of resignations last year.

Denton has been notoriously frugal with his blog network, this spring selling off three of the company's less profitable blogs; in 2006, Gawker Media went as far as shutting down two blogs that had not lived up to expectations.

This post was last updated at 11:21 a.m. PDT.