Friday, May 23, 2008

Online Ad Spending Holding Strong

MAY 23, 2008

Strong growth, good prospects

For the full year 2007, online ad revenues totaled $21.2 billion, according to the Interactive Advertising Bureau (IAB)/PricewaterhouseCoopers (PwC) "2007 Internet Advertising Revenue Report." That was 26% higher than 2006, which was itself a record year.

The IAB and PwC said that Q4 2007 Internet advertising revenues reached $5.9 billion, the highest ever for a single quarter and 24% higher than the same period in 2006.

"Despite the current state of economic uncertainty, 2007 was another record year and the 13th consecutive record quarter," said David Silverman, partner, Assurance, PwC, in a statement.

The IAB and PwC said that search, display, classifieds and lead generation all continued growing. As in prior years, consumer advertisers were the largest category of Internet advertising spending, at 55% of 2007 full-year revenues, up from 52% from the full year 2006.

eMarketer predicts that despite continued strength relative to most other media, Internet ad spending growth will drop to about 16% in 2009. This slowdown reflects a combination of the maturing online ad market and overall economic weakness.

There will be a bounceback in 2010 due to a recovering economy and a much larger influx of branding-oriented ad dollars flowing online. One major source of those escalating spends will be video ads, which are relatively expensive and greatly desired.

"By 2012, the anticipated boom in online video advertising combined with continued strength in more established Internet ad categories, such as paid search and classifieds, will mean spending growth greater than 20% for the first time since 2008," said David Hallerman, senior analyst at eMarketer.

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