NEW YORK — U.S. Internet advertising revenue dipped slightly in the second quarter from the previous three-month period, which likely is a ripple effect from the bad economy given that prior to 2008 the market had seen several consecutive quarters of increases.
According to a report released Tuesday by the Interactive Advertising Bureau and PricewaterhouseCoopers LLP, online advertising revenue totalled $5.7-billion in the second quarter.
That marked a significant increase from $5.1-billion in the same quarter in 2007. But it fell from the $5.8-billion reported for the first quarter of this year.
“When you look at the economic environment, I think one would conclude this is certainly quite reasonable and not unexpected,” said David Silverman, a partner at PricewaterhouseCoopers, in a conference call.
This is the market's second straight decline. In the first quarter, ad revenue fell from the $5.9 billion reported for the fourth quarter of 2007.
The two largest segments of the online advertising market - search and graphical “display” ads - logged growth in the second quarter. Search advertising revenue rose 24 per cent from the previous year to $2.5-billion, while display advertising revenue increased about 13 per cent to $1.9-billion, according to the report, which gathers data from more than 100 online ad sellers.
Meanwhile, classified-ad revenue fell 7 per cent to $804-million, and lead-generation revenue declined 1 per cent to $402-million. Lead-generation revenues generally are the fees that marketers pay Internet data companies for lists of customers most likely to be interested in buying a particular product.
In a recent interview, Barry Diller, head of Internet company IAC/InterActiveCorp, whose properties include search engine Ask.com, said the poor economy could shrink the online ad market over the next year or two. However, Mr. Diller also predicted that other forms of advertising will suffer more, because advertisers' ability to track how often their Internet ads are being clicked on gives them more clarity into how well their money is being spent.
Regardless, online ads still amount to a relatively small segment of the overall amount of money spent on advertising - about 10 per cent, according to the ZenithOptimedia advertising company of England.
