First-half Web ad spend down 5.3% to $10.9 billion, say IAB, PricewaterhouseCoopers

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US Web advertising revenues dropped to $10.9 billion for the first half of this year, representing a 5.3% decline from the same period in 2008, according to the IAB Internet Advertising Revenue Report for the first six months of 2009. The study was released October 5 by the Interactive Advertising Bureau and PricewaterhouseCoopers.

Sheryl Draizen, SVP at the IAB, explained that the decline is minor compared to other advertising segments.

“If you look at this aspect, the inherent decline that we are reporting is relatively small,” she said. “Nielsen registered a 15.4% decline of total media advertising revenue for the same period. The Internet decline is relatively small in the big picture.”

The IAB and PwC reported that first-quarter Web advertising dropped 5% year over year to $5.5 billion. Total measured advertising spending during the year's first half fell 14.3% year over year to $60.9 billion, according to TNS Media Intelligence.

While advertising spending is down, David Silverman, assurance partner at PwC, pointed out that 2008's fourth quarter was a record breaking period with $6.1 billion in Web advertising spending. He added that despite the drop during the first half of this year, online advertising is still growing overall.

“What you really see is the rebirth of an industry,” he said. “Over the last six years, we have seen phenomenal growth that has made it a viable industry.”

The report also found that the search- and display-related advertising categories have the largest shares of overall interactive spend. Search-related revenues totaled more than $5.1 billion for the first six months of 2009, up slightly from the same period in 2008. Display advertising — which includes display ads, rich media, digital video and sponsorships — totaled almost $3.8 billion in the first half of the year, showing a 1.1% decline from the same period in 2008. However, digital video saw big gains with a 38% increase over the first half of 2008. Retail was the largest vertical category, with 21% of the overall spend.

“In this recession, there is a greater combination of PR and advertising, and the fact that online media operates throughout the purchase funnel is good for online advertising,” explained Draizen.

The survey did not predict future spending. However, Silverman explained “based upon historical percentages, the second half is typically stronger the than the first half.” GroupM, the parent company of WPP media agencies Mediaedge:cia and MindShare, predicted last month that Internet advertising will reach $64.7 billion next year, accounting for 15% of global measured advertising spending.

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