Is the ad downturn coming to a close?
US online ad spending revenues were down 5.3% year over year, to $10.9 billion in the first half of 2009, according to figures from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC).
David Hallerman, eMarketer senior analyst, expects Internet ad spending to continue falling during the second half of the year, but believes the ad market is bottoming out. “While our preliminary estimates point to another decline in the year’s second half, expect that to be less than the first half’s 5.3% drop,” he said.
Indications are that the economy is starting to move forward, with recent upticks in consumer spending. But it may take months before unemployment drops, and turning the corner will be a slow process.
It was no surprise that spending—even on the Internet—had been soft.
What was a surprise: Banner ad spending was down only slightly, dropping by just 1%. While The Nielsen Company also reported a similar first-half decline for display spending, that firm includes only CPM-based advertising in its research—and therefore is missing part of the banner ad market. In contrast, the IAB/PwC data shows that only 38% of online advertising was sold through the CPM pricing model in the year’s first half, as compared with 58% sold on a performance basis.
“Steady spending for banner ads—along with the rise of performance-based ad sales—suggests that ad networks are becoming increasingly important for both advertisers and publishers,” noted Mr. Hallerman.
“For advertisers, the relatively lower costs of banners bought through networks has continued to attract significant budget shares,” he continued. “For publishers, the competition for ad dollars has only accelerated, with more and more pages and visitors across the Internet. Ad networks are becoming essential for selling a higher percentage of their available inventory.”
On the positive growth side, search spending was up to reach 47% of the total online spend. And online video ad spending, though still small in absolute terms, was up 38%.
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Check out today’s other article, “Uneven Online Ad Market in Western Europe.”