Markets

2008 Online Ad Spend Strong, Compared to Everything Except Online Ad Spend

By Catharine Taylor

Updated on: March 30, 2009 / 1:21 PM EDT / MoneyWatch

The full-year interactive advertising spending numbers are in, and they're up! ... but not by as much as they might have been had Lehman Brothers not folded and brought the entire universe down with it. Here's the topline from the Interactive Advertising Bureau, which hires PricewaterhouseCoopers on a quarterly basis to gather and number-crunch blind ad revenue numbers from the online media community:

2008 revenue totaled $23.4 billion, a 10.6 percent increase from 2007.
Fourth quarter revenue was up 2.6 percent, to $6.1 billion compared with the fourth quarter of 2007.
Revenue was up 4.5 percent between the third and fourth quarters of 2008.

Any other medium would be thrilled with this performance, but for Internet advertising, this is slacking -- 2007 revenues were up 26 percent vs. 2006, fourth quarter revenues rose 24 percent between 2006 and 2007, and revenues between the third and fourth quarters of 2007 were up 13 percent. Interactive advertising only stays in the land of the double-digit percentage increases when revenue earlier in 2008 is counted.

The report is full of other key factoids, but here are a few that stood out:

The importance of being Google: The share of dollars spent on search is growing, rising from 41 percent to 45 percent, or $10.5 billion, in the last year.
Ad dollars are on display: Despite continuing criticism and concern about online display advertising, that category grew share as well, rising almost eight percent to $7.6 billion. (However, I'd expect display to get hurt much more than search in coming quarters, since it's not as connected to the bottom line.)
Blame it on Craig: The share of classifieds revenue dropped by 4 percent, to 14 percent, in 2008. It made up 16 percent of all ad revenue in 2007.
Perform, or else: The share of ads priced on a performance basis rose from 51 percent to 57 percent in 2008.

I'll be watching, and waiting, to see how numbers come in for the first quarter, as will many of you. If they are down, this will mark the first time since the 2001-03 swoon that the IAB's numbers will have shown a decline.