U.S. online ad revenue down 5 percent in first half of 2009

Companies in the U.S. spent about 5 percent less to advertise online in the first half of 2009 compared with the same period last year, according to the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC).

U.S. online ad revenue reached US$10.9 billion during the first six months of the year, down 5.3 percent from the first semester of 2008, the IAB and PwC said on Monday.

A bright spot was the emerging category of online video ads, in which spending grew 38 percent.

Considering the difficult economic climate, the effect on online advertising has been mild, because marketers view this medium as effective and easy to monitor, the IAB and PwC said.

In what will be good news for Google, search advertising not only continued to be the most popular format but actually increased its slice of the U.S. online ad pie, from 44 percent in the first half of 2008 to 47 percent.

Display ads, such as banners, video and multimedia, grew from 33 percent of ad spending to 34 percent in the first half of 2009. Meanwhile, the classifieds format declined in popularity, dropping from 14 percent of spending to 10 percent.

Online advertising is the main source of revenue for many segments of the Internet market, such as search engines like Google, Web portals like Yahoo and AOL, and social-networking companies like Facebook and MySpace.

The strong growth in online ad spending between 2003 and the first half of 2008 was key in fueling the innovation wave from Web 2.0 startups that developed or improved upon services like blogging, photo and video sharing, social networking and social media.

However, U.S. online ad spending couldn’t remain immune to the economic slowdown and recorded its first quarterly drop in several years in the first quarter of 2009, when spending reached $5.5 billion, down 5 percent when compared to 2008’s first quarter. That broke a string of 24 consecutive year-on-year quarterly increases in U.S. online spending that began in 2003’s first quarter.

It remains to be seen if online ad spending will fall for the whole of 2009, which would be the first annual decrease since 2002. Spending grew 35 percent in 2006, 26 percent in 2007 and 11 percent in 2008.