Despite the economic slump, Internet advertising spending increased 23.9% in Q1 to $7.1 billion, per IDC, Framingham, Mass. But the market research group’s earlier projections of 20-22% growth for digital spending has dropped to about 14%, compared to last year’s growth of 27.7%.
“By this point, we thought we’d see more caution in spending online,” said Karsten Weide, program director for IDC’s digital media and entertainment unit. “But these Q1 numbers are what we’d expect with no crisis at all.”
With less revenue, advertisers are forced to save money by using less expensive and better-targeted marketing channels.
“And this kind of downturn sends marketers to new media,” Weide said. He added that the amended forecast for growth stems from longer term negative economic factors. “But there will still be growth, and solid growth at that,” he said.
Nevertheless, IDC expects U.S. Internet ad spend to increase in five years, making up about 16% of the total ad spend by 2012. That figure is currently around 11%.
Google remains the leader in the U.S. with 24.8% of the advertising market share, followed by Yahoo!, which holds 11.2% share.
The news is encouraging for IT and new media companies that can be sure they will have money coming in, said Weide. “For the other media companies, this should be part of the continued wake-up call. But it’s not that they didn’t know that the new media are grabbing old media budgets.”