• by Erik Sass  @eriksass1, November 21, 2007

Advertising revenue for newspapers' online operations grew 21% in the third quarter to $773 million, according to figures released Tuesday by the Newspaper Association of America. Overall, online now accounts for 7.1% of total advertising revenue in the newspaper industry--up from 5.4% in the third quarter of 2006.

The caveat: the strong online performance was more than offset by a substantial 7.4% drop in overall ad revenue during the third quarter, to $10.9 billion. Considered separately, print ad revenues tumbled 9% to $10.1 billion. Continuing a trend from the last several years, many of the losses came in print classified advertising, down 17% to $3.4 billion. The weak real-estate market contributed to the 24.4% drop in the real estate category, while recruitment dropped 19.7% and automotive was down 17.7%.

As is in recent quarters, the drops in classified were joined by decreases in retail and national ad revenue--which fell 4.9% and 2.5%, respectively, for a total $6.8 billion.

The good news about online revenue growth was also tempered somewhat by the fact that the rate of growth continues to slow, on a year-over-year basis. In 2006, online revenues grew 31.5%, while in the first three quarters of 2007, the growth rates have been 22.3%, 19.2%, and 21%, respectively. This represents a slight decrease in absolute dollar amounts.

In the first three quarters of 2007, online revenue added $400 million overall, as opposed to growth of $430 million in the same period of 2006.