IAB Ad Revenue Report Shows Mixed Trends

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It's official: Spending on Internet advertising continues to climb -- year over year -- reaching $5.8 billion for the three-month period ended March 31, 2008, according to a report released Tuesday by the Interactive Advertising Bureau.

That represents an 18.2 percent increase over the same period in 2007, when digital advertising revenue totaled $4.9 billion.

Compare the data another way, though, and there's a sign of slippage.

Internet ad revenue dropped 1.7 percent compared to the record breaking $5.9 billion tally for the last three months of 2007.

The decline was expected, said David Silverman, partner, Assurance, PricewaterhouseCoopers, which conducts the study on behalf of the IAB.

"The cyclical fourth quarter to first quarter drop in traditional media advertising spend, combined with an overall economic slowdown, resulted in a not so unexpected first quarter slowdown in the growth of online advertising," Silverman said in a prepared statement.

That wasn't the case, however, last year when Internet ad revenue totaled $4.9 billion for the first three months of 2007, an increase of 2 percent compared to the last three months of 2006. Ditto for the year before that: Internet ad revenue reached $3.9 billion for the first three months of 2006, an increase of 6 percent compared to the prior three months.

Industry pundits point out that ad spending typically peaks during the fourth quarter of the year during the Christmas holiday season.

Executives from IAB and Pricewaterhouse Coopers remain optimistic about Internet advertising's future. "The fundamentals of interactive advertising spend continues to be positive and I would expect to see continued growth in the future," Silverman said.

IAB CEO Randall Rothenberg weighed in: "We expect growth to continue, as consumers spend more and more time online, and marketers find more -- and more innovative -- ways to reach them through digital media."

This particular report doesn't break out Internet ad revenue by category, such as search or display advertising. Stay tuned for that information three or so months from now when the IAB releases its mid-year report.

The IAB's revenue tally for the first three months is in line with impression growth estimates released earlier this week by Nielsen Monitor-Plus. Also, TNS Media Intelligence last week reported that spending on display advertising grew only by 8 percent for the first three months of 2008 compared to 15.9 percent a year ago.