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Online Ad Spending Dips 5% In Q2

Industry set for recovery

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Global spending on Internet advertising declined for the second consecutive quarter, by 5 percent, to $13.9 billion from $14.7 billion in the same quarter a year ago, according to a new report from IDC.

All global regions posted losses, except for the Asia/Pacific region and Japan, which saw slight gains in the second quarter. U.S. online ad spending also dropped for the second quarter in a row, by 7 percent year- over- year, to $6.2 billion from $6.6 billion.

Karsten Weide, Program Director, Digital Media and Entertainment for IDC
Karsten Weide
Program Director,
Digital Media and
Entertainment for IDC

In the United States, all major advertising formats saw year-over-year revenue losses, with search ads being least affected, display ads losing 12 percent, and classifieds down 17 percent.

All major publishers’ ad sales declined, for the most part at double-digit rates, with Google being the only exception, posting single digit growth. Hardest hit was Monter.com with a 31 percent decline and AOL, affected by both weakness in display ads as well as internal sales problems.

For the coming quarters IDC says there is good news and bad news. The bad news is U.S. advertisers will likely decrease their online spending quarter over quarter in 3Q09 by about the same amount as they did in the previous quarters of this year. The good news is things are not going to get any worse in the Internet ad industry.

"We think the industry will continue to see losses in the third and fourth quarters, but the growth rates – or the loss rates, if you will – will eventually begin to improve. However, we also believe the industry may have to wait until mid-2010 until it sees real growth again," said Karsten Weide, program director, Digital Media and Entertainment at IDC.

Online Ad Spending Dips 5% In Q2
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