Five per cent decline in internet advertising, says IAB

06 Jun 2009

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Internet advertising revenue was $5.5 billion for the first quarter of 2009, a five per cent decline from the same period last year, according to a report released this morning from the Interactive Advertising Bureau.

The 10 per cent decline from the fourth quarter, when revenue surpassed $6 billion for the first time, is the biggest decrease, percentage-wise, since at least 2001. The last time the market experienced a year-on-year quarterly drop was during the dot-com crisis, when spending fell for eight straight quarters, from 2001's first quarter through 2002's fourth quarter.

The slowdown in online advertising has been precipitous. Spending grew 35 per cent in 2006, 26 percent in 2007 and 11 percent in 2008.

If spending shrinks in 2009, it will be the first annual decrease in U.S. online ad spending since 2002, which recorded a 16 percent drop.

The news is clearly bad for all advertising-supported Internet companies, from big ones like Google, Yahoo, Microsoft, Facebook and AOL, to small startups with ad-dependent sites and Web applications.

The silver lining, according to the IAB and PwC, is that online advertising has been hit less severely than other types of advertising and that growth in this market is expected to resume once the US economy recovers.

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