IAB: Internet Ad Spending Drops 3.4% In 2009 To $22.7 Billion

As expected, U.S. online ad spending dipped last year for the first time since the 2001-2002 recession -- dropping 3.4% from $23.5 billion in 2008 to $22.7 billion in 2009, according to year-end data released Wednesday by the Interactive Advertising Bureau and PricewaterhouseCoopers. After running flat for most of last year, ad spending in the fourth quarter saw a seasonal lift, increasing 14% from $5.5 billion in the third quarter to $6.3 billion -- the most in any quarter to date.

IAB and Pricewaterhouse executives said the uptick pointed toward a rebound in digital ad budgets in 2010. "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," said David Silverman, a PwC Assurance partner, in a statement.

Market research firm eMarketer, which had projected a 2.9% decline to $22.8 billion in 2009, is predicting the overall economic recovery this year will lead to single-digit growth in online spending in 2010. Any turnaround should be easier than the last time because the drop-off last year wasn't as steep as in 2001 and 2002, when spending fell 12% and 16% respectively, before vaulting back to a 21% gain in 2003. But total online ad dollars since 2001 have roughly tripled, reducing volatility from year to year.

One of the biggest surprises in the IAB report was that display spending actually increased 4% to $8 billion, aided by a 39% gain in video spending to $1 billion.

Search was up just 1% to $10.7 billion but remained the biggest online ad category overall, with a 47% share of spending, followed by display/banner, 22%; classified, 10%; rich media, 7%; lead generation, 6%; digital video, 4%; sponsorship, 2%; and email, 1%. Classified took the biggest hit last year, falling 29% to $2.3 billion as a result of the recession's impact on hiring and the auto and real estate sectors.

Spending among all the major ad categories was flat or down slightly in 2009 with the exception of the telecom sector, which increased spending from $3.5 billion to $3.6 billion and accounted for 16% of total online ad dollars. Retail remained the largest category, although it shrank from a 22% to 20% share.

At $22.7 billion, the Internet accounts for 17% of combined U.S. ad-supported media spending, ranking third behind local spot TV and newspaper advertising and ahead of categories including cable TV, network TV and radio, according to the IAB/Pricewaterhouse study. "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," said IAB President Randall Rothenberg in a statement.

Next story loading loading..