Online advertising is growing at a slower rate than before, says new research.
US internet advertising revenue climbed in the fourth quarter of 2008 in spite of the poor economy, but the growth rate was sluggish compared to previous years, according to new analysis.
The report from the Interactive Advertising Bureau and PricewaterhouseCoopers said that revenue from online ads – which companies like Google and Yahoo heavily rely on – totalled US$6.1 billion ($11.03 billion) in the last three months of 2008.
That marked an increase of US$154 million, or almost 3 per cent, from the same period in 2007. Back then, internet advertising was up 24 per cent over the previous year.
In the most recent quarter, revenue from search ads, which make up the largest segment of the online advertising market, rose 13 per cent to US$2.8 billion. Revenue from graphical “display ads,” the second-largest segment, fell 4 per cent to US$2 billion.
Sherrill Mane, senior vice president of industry services for the Interactive Advertising Bureau, a trade group, said any growth at all was a positive sign for an industry that is starting to mature while coping with the recession. David Silverman, a partner at PricewaterhouseCoopers, called the year-over-year growth “remarkable.”
“It speaks to the fact that the vibrancy of the internet is still there,” he said.
For the full year, online ad revenue totaled US$23.4 billion – up US$2.2 billion, or a bit less than 11 per cent, from 2007.
The report said revenue from search advertisements rose 20 per cent in 2008 to almost US$10.6 billion. Display ad revenue rose 8 per cent to US$7.6 billion.
Though still a small segment within the category, digital video ads were a bright spot, more than doubling in 2008 to US$734 million from US$324 million in 2007.
About 10 per cent of all money spent on advertising in 2008 went toward ads on the internet, according to UK-based advertising company ZenithOptimedia. While that is still a small portion of the total, it rose from 8.6 per cent in 2007, while the money spent on newspaper and magazine ads declined over the same period.
After the report from the IAB and PricewaterhouseCoopers was released, digital media research company eMarketer lowered its 2009 estimate for US online advertising revenue to US$24.5 billion from a prior expectation of US$25.7 billion. That would still represent an increase of about 4.5 per cent – stronger than what the industry posted in 2008.
March 31, 2009
source: nzherald.co.nz