Growth in online advertising slows in first half of 2008

Internet advertising revenue in the US for the first half of 2008 totalled $11.5 billion, up 15.2 per cent from the same period last year, according to numbers released by the Interactive Advertising Bureau on Tuesday. Not so shabby, right?

But when you consider that in 2007, revenue in the first half of the year was up 27 per cent from the same period the previous year, and that in 2006, revenue climbed 36 per cent from the previous year, the growth numbers aren't that impressive.

"From what I see, this is a similar pattern to the last slowdown in 2001," said David Silverman, a partner in the entertainment, media and communications practice at PricewaterhouseCoopers, which worked with the Interactive Advertising Bureau to come up with the numbers.

Silverman said the second half of the year typically sees more spending than the first half. But this year, he said, this may be different "given the continuing slowdown and economic conditions".

Search continued to dominate online spending, accounting for 44 per cent of money spent advertising online, up from 41 per cent the previous year. Spending on classified advertising, at $1.6 billion, fell to just 14 per cent of the pie.

Still, online looks healthy when compared with other advertising sectors. Zenith-Optimedia on Tuesday cut its forecasts for the overall US advertising market in 2008 and 2009, predicting growth of 1.6 per cent this year rather than the 3.4 per cent it had initially projected. In 2009, ad spending in the US will grow less than one per cent, the firm said.

"All advertising is somewhat depressed, and online advertising has fared better than average," said Joe Apprendi, chief executive of Collective Media, a New York-based online advertising firm. "It's going to grow, which isn't the case with all media."