Online Ad Market Sees Glimmer of Hope Following a Gruesome 2009
Unfortunately, one strong quarter could not offset the rest of the year, which saw online ad spending fall off a cliff. Overall, 2009 Internet advertising revenue in the U.S. came in at $22.7 billion, a 3.4% drop from 2008, the Interactive Advertising Bureau and PricewaterhouseCoopers announced. The results marked the first annual decrease since 2002, when the country was last battling its way out of a recession.
Good News in the Bad News
The annual results may sound like bad news for an industry used to double-digit increases every year, but some industry experts see the results as something worth celebrating.
"The record $6.3 billion spent on Internet advertising in the fourth quarter of 2009, while certainly aided by seasonal demand, is a strong indication that the worst of the economic impact on Internet advertising is over and that the seeds of growth have been planted," David Silverman, a partner at PricewaterhouseCoopers said in a statement.
Search advertising accounted for the largest percentage (47%) of overall Internet ad spending in 2009. In order to show up in search results on Google (GOOG) or Bing, advertisers spent close to $11 billion.
The real growth story of last year, however, was in digital video -- think television commercials that air online. Marketers spent 39% more on these ads than they did in 2008. While still only comprising slightly more than $1 billion, or 4% of total online ad spending, digital video continues to be an area for growth. "Consumers don't seem to mind [digital video commercials]. It reminds them of TV," said Terence Kawaja a managing director of investment banking advisory firm GCA Savvian Advisors.
Classifieds and email advertising lost ground last year, with spending on classifieds falling from $3.2 billion in 2008 to $2.3 billion in 2009. Spending on email ads dropped from $405 million in 2008 to $292 million in 2009.