Web Ad Growth Deteriorates

Internet advertising is still one of the bright spots for the hard-hit ad industry — for now.

The Interactive Advertising Bureau released its fourth-quarter and full-year U.S. online ad spending report for 2008, which showed the overall industry growing 11 percent for the year to reach $23.4 billion. The effect of the economy, however, was clear in Q4, when the $6.1 billion of ad spending, while marking the highest level yet recorded, represented a year-over-year increase of 2.6 percent. The 4.6 percent sequential quarterly spending growth was the lowest since 2002.
“The economy has had a significant impact on the short-term growth of the Internet ad market,” said David Silverman, partner at PricewaterhouseCoopers, the accounting firm that compiles the spending report for the IAB.
The IAB put the numbers in a positive light, pointing out that non-Internet media was down over 2 percent in 2008, according to figures compiled by Nielsen, the parent company of Adweek.
Yet the trends in the report point to the go-go days of Internet ad-spending increases coming to a halt. The IAB declined to say whether the numbers pointed to the industry notching its first quarter where spending declined from the same period a year earlier, although the numbers show that as a possibility in the first or second quarter.
Based on the new numbers, eMarketer revised its projections for 2009 Internet ad spending down. It previously forecast spending at $25.7 billion, an 8.9 percent growth rate. It has cut the growth forecast in half, projecting Web ad spending to hit $24.5 billion in 2009, up 4.5 percent.
For now, advertisers are continuing to spend in direct response ad methods. The IAB said search spending was up 20 percent for the year to $10.5 billion. Performance pricing outstripped impressions, growing from 51 percent of spending to 57 percent.
The report tracked the weakness seen in display advertising. While it notched 8 percent growth for the year, spending on banners fell 4 percent in the fourth quarter. One bright spot for branding online: Web video ad spending more than doubled to $724 million.