US online ad market slows in 2008, but still grows

Spending grew almost 11 percent compared with 2007

Online advertising spending in the U.S. grew considerably less in 2008 than in prior years, but the mere fact that it increased over 2007 is a positive sign, considering the economic crisis that started last year.

That's the conclusion from the 2008 Internet Advertising Revenue Report (PDF), released Monday and sponsored by the Interactive Advertising Bureau (IAB) and conducted by PricewaterhouseCoopers (PwC).

U.S. online ad spending reached US$23.4 billion in 2008, a 10.6 percent increase compared with 2007. By comparison, overall U.S. ad spending shrunk 2.6 percent in 2008, The Nielsen Company reported earlier this month.

This is a sign not only that online advertising is weathering the economic crisis better than other forms of advertising, but that it is an undeniably effective and accountable vehicle for companies to market their products and services, said Peter S. Fader of the Wharton School of The University of Pennsylvania, during a conference call held by the IAB and PwC to discuss the report.

"There have always been a lot of naysayers out there about Internet advertising who have said it's a passing fad, or it's overblown, or it's just a little niche, or it just complements other types of advertising," Fader said. "It's time to acknowledge that Internet advertising has grown up, it's a fairly mature industry and it deserves a place at the table."

Nonetheless, the growth in online ad spending pales in comparison to the 26 percent jump in spending recorded in 2007 over 2006. Annual online ad spending has grown for the past six years, after declining in 2001 and 2002.

In the fourth quarter of 2008, spending was $6.1 billion, up 2.6 percent compared with the same quarter in 2007, and 4.5 percent compared with 2008's third quarter, the smallest quarterly sequential increase since 2001.

Search advertising, from which Google generates most of its revenue, broadened its lead as the preferred online ad format, accounting for 46 percent of spending in 2008's fourth quarter, up from 42 percent in the same period in 2007.

For the full year, the search format had a 45 percent share, up from 41 percent in 2007. It has been the most popular ad format since 2004.

Search was followed by the display format with a 33 percent share, down 2 percent from its 35 percent share in 2007's fourth quarter. The display format includes banner ads, rich media, digital video and sponsorships. For the full year, display ads' share fell to 33 percent from 34 percent in 2007.

The top 10 ad sellers collectively increased their share of spending, grabbing 72 percent of the pie in the fourth quarter, up from 69 percent in the same quarter in 2007.

Retailers remained the top spenders, as a group, accounting for 22 percent of online ad spending in 2008, followed by financial services firms (13 percent), automotive companies (12 percent) and computer industry vendors (12 percent).

Join the PC World newsletter!

Error: Please check your email address.

Tags advertisingdigital marketingonline advertising

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Juan Carlos Perez

IDG News Service
Show Comments

Essentials

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?