• by Wendy Davis  @wendyndavis, November 15, 2006

Online ad spending last quarter reached an estimated $4.2 billion--up 33% from the same time last year, according to a report issued Tuesday by the Interactive Advertising Bureau and PricewaterhouseCoopers.

Quarter-over-quarter, however, revenue increased by just 2%, marking a slowdown in sequential growth. Last year, third-quarter revenue totaled $3.1 billion, which marked an increase of 33.9% over 2004 and 4.7% from the second quarter of 2005. Earlier this year, second-quarter ad spending totaled $4.1 billion, marking a 5.5% increase from the first quarter.

Sheryl Draizen, senior vice president, general manager of the IAB, says the online ad market is robust, despite the seeming slowdown in sequential growth. "I still think we're on track for a very, very strong year," she said. "My sense is that there's going to be a very strong fourth quarter here," adding: "we're actually seeing marketers increasing their budgets."

Draizen chalked up the small quarter-over-quarter growth to seasonality, saying that the summer months of July and August tend to be slow. But at least one major online company, Yahoo, earlier this year warned that ad growth was slowing. Yahoo CEO Terry Semel told investors at a Goldman Sachs conference in late September that it was seeing soft ad sales in the auto and financial services categories.