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U.S. Web Spending: Strong Or Weak Economy?

The Interactive Advertising Bureau released yet more robust spending figures from Internet advertisers in the second quarter, but a Financial Times report swoops in to steal some of that thunder. Despite a high rise of 37 percent from a year before, totaling $7.9 billion for the first half of the year, S&P analyst Scott Kessler points out that display advertising lost 3 percent of its share of the total, falling from 34 percent to 31 percent of spending. That slowdown--a worrisome sign for publishers--mirrors Yahoo's highly publicized restatement of expected third-quarter ad sales on falling demand for display. The million-dollar question is whether the depression at Yahoo is down to a broader slowdown of Web spending or just falling demand for the Web giant's inventory. Mark Mahaney, a Web industry analyst at Citigroup, notes that Yahoo is more dependent on advertising by economically sensitive industries than other Internet companies, and thus more vulnerable to a slowdown. Here's a little perspective: Yahoo accounts for 54 percent of all online financial services advertising and 34 percent of all automotive spending on the Web. These, of course, are the two sectors that Yahoo singled out for spending less than expected. To be sure, display advertising was the only sector of the online ad business to have seen slower growth in recent months. Should there be a broader economic slowdown, it's unclear what broader impact that would have on the online ad business--but search, which depends heavily on small-to-midsize advertisers, would likely be affected.

Read the whole story at Financial Times »

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