April 8, 2010, 12:00 AM

Online ad spending rebounds to set a record in the fourth quarter

2009 online ad revenue of $22.7 billion declined 3.4% from 2008’s $23.5 billion, says the 2009 IAB Internet Advertising Revenue Report. But advertisers spent a record $6.3 billion online in the fourth quarter of 2009, a 2.6% increase year over year.

Zak Stambor

Managing Editor

U.S. Internet advertising declined 3.4% in 2009 from the prior year, but record online ad spending in the fourth quarter points to more growth ahead, says the 2009 IAB Internet Advertising Revenue Report, produced by the Interactive Advertising Bureau and PricewaterhouseCoopers LLP.

“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,” says David Silverman, a partner at PricewaterhouseCoopers.

 

For all of 2009, U.S. Internet advertising revenue amounted to $22.7 billion, down from $23.5 billion in 2008. But the fourth quarter of 2009 hit a record quarterly high of $6.3 billion, a 3.3% increase from $6.1 billion year over year and a 14.5% increase from $5.5 billion in the third quarter of 2009.

Search and display remain the biggest components of interactive advertising spend. Search revenue, comprising 47% of the total, amounted to $10.69 billion for 2009, up 1.4% from 2008’s $10.54 billion, the report finds. Display advertising-which includes display ads, rich media, digital video and sponsorship-totaled $7.97 billion in 2009, showing an increase of 4.3% from $7.64 billion the year before. Digital video continues to experience robust growth, with an almost 39% increase from $734 million in 2008 to $1.02 billion in 2009. Conversely, classified spending fell 29.0% to $2.25 billion from $3.17 billion.

These latest revenue figures underscore the ongoing shift from traditional media to digital: Based on industry data from PricewaterhouseCoopers from 2005 to 2009 in five key U.S. ad-supported media (television, radio, newspapers, consumer magazines and the Internet), the Internet’s share of combined ad revenue grew from 8% to 17%, the report says.

“The latest IAB report makes clear that digital media is now a core component of successful advertising and marketing campaigns,” says Randall Rothenberg, IAB president and CEO. “As consumers spend more of their time immersed in digital media, marketers are increasingly reaching them there-building brands online and making digital the central force in their cross-media strategies.”

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