Pace of Online Ads Starts to Slow

NEW YORK Online advertising continues to demonstrate robust gains in 2006, though the pace of such growth will slow slightly.

Internet advertising revenue approached $8 billion through the first six months of the year, according to new figures released by the Interactive Advertising Bureau and PricewaterhouseCoopers. The record $7.9 billion haul gathered through June of this year represented a 37 percent increase over the same period last year. In fact, the second quarter alone saw revenue exceed $4 billion, also a record.

“This latest report is a clear indication that interactive is of increased importance to marketers today to engage their consumers and drive sales,” said IAB president and CEO Greg Stuart, CEO of the IAB.

Yet according to new figures released by Web researcher eMarketer, online advertising isn’t growing quite at the exponential clip seen in recent years. EMarketer says overall spending will increase by a still enviable 26.8 percent this year, versus growth spurts of more than 30 percent seen the previous two years.

“Any other medium’s executives would be delighted to see ad spending grow at those rates,” said eMarketer senior analyst David Hallerman.

Total dollars will near the $16 billion level by the end of this year, pushing past $21 billion in 2007, according to eMarketer. And while online advertising will account for just 5.7 percent of total media dollars this year, by the end of the decade it will reach 8.9 percent of spending.

According to both PwC and eMarketer, paid search advertising still accounts for the lion’s share of Web spending—in the neighborhood of 40 percent of ad revenue.