Online Ad Revs: Q2 OK, Q3 Maybe Not

Yesterday the IAB put out its US online ad revenue numbers for Q2 and the first half. Overall online saw almost 13% ad revenue growth compared with a year ago (and 15% for the 1H vs. ’07). However the numbers were slightly down from Q1 this year, and they’re likely to go farther down in Q3 and Q4. 

Here are some of the topline figures:

Internet advertising revenues (U.S.) for the first six months of 2008 were $11.5 billion, setting yet another new half-year record that represents a 15.2 percent increase over the first half of 2007. The second quarter of ’08 was up 12.8% over the same period of 2007 and showed a slight decline of 0.3% from the first quarter.

In a period of recession I would have predicted an acceleration of the movement of ad dollars into online. That’s happening here and there but not at the across-the-board levels one might have expected. In particular display ad spending is flat-to-declining. Display is where one would expect traditional branding dollars to flow. Yet CPMs are low, there’s an abundance of supply and even skepticism about the efficacy of online display. (The trouble here is that the “click” is king and it’s the wrong measure of value for display.)

Accordingly, what these data also show is that there’s something of a movement away from CPM ads to performance-based ads, which favors search. Indeed, search is one of the categories to show gains. Classifieds, interestingly, show a corresponding three point loss. Classifieds is where the IAB puts IYP revenues, among other types of listings. 

These overall growth figures are much better, on a percentage basis, than traditional media. Yet online is not immune from the impact of the economy and I suspect the second half will be quite ugly, as they say in the vernacular. That’s partly because retail and financial services are the top two industries that advertise online and they’re among the hardest hit by the economy.

One Response to “Online Ad Revs: Q2 OK, Q3 Maybe Not”

  1. Does Economy Affect PPC? « Screenwerk Says:

    […] Economy Affect PPC? The IAB found in its report on 1H online ad spending trends that marketers were shifting some of their money from CPM-based […]

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