IAB Report: Ad Spending Rebounded in Q4 And Fuels Industry Hopes

 

Online ad spending was down 3.4 percent last year compared to 2008 but saw a significant bounce in the fourth quarter, the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers reported today. Q4 spending in 2009 was up 14 percent compared to the third quarter, but increased 2.6 percent when compared to Q4 2008.

Ad spend for Q4 2009 totaled $6.3 billion and seemingly has provided a ray of hope among industry players. “Apocalypse… not now,” quipped Sherrill Mane, SVP of industry services for the New York-based IAB.

Indeed, the mood was cautiously upbeat during the IAB’s conference call as advertisers keep their fingers crossed that the 2008 recession is beginning to fade. What’s more, the report’s categorical break-downs provide a glimpse into which specific channels get the hatchet first when budgets tighten.

Classifieds got hit the hardest during 2009 as online advertisers spent $2.3 billion, a 29 percent year-over-year decline, according to the survey-based “IAB Internet Advertising Revenue Report” that was conducted by PricewaterhouseCoopers. During Q4, classified ad spending totaled $594 million, a drop of 23 percent compared to the same period in 2008.

“That decrease was largely driven by the overall economy and its impact on jobs, real estate, and autos – three categories that classifieds relies upon,” said David Silverman, partner for the New York-based PricewaterhouseCoopers.

During Q4 2009 – compared to the same period in 2008 – the ad spend in the following categories recorded these changes: e-mail (-11 percent), lead-generation/referrals (-14 percent), and brand sponsorships (-1 percent). For the full year, the ad spend on rich media dipped by 9 percent while digital video promos saw a lift of 39 percent. The video category jumped from $734 million to more than $1 billion from year to year.

Spending for the Internet’s leading ad channel, search marketing, totaled $10.7 billion for the year, accounting for 47 percent of all online ad spending. That total represented a 1 percent increase over 2008. For Q4, spending on search marketing was $2.9 billion, up 4 percent compared to the same period in 2008. The second biggest channel, display ads, saw a lift of 15 percent while accounting for 35 percent ($2.3 billion) of the industry’s revenue totals.

Terence Kawaja, managing director for the investment banking firm GCA Savvian Advisors, said the report offered signs of optimism for those in the advertising business, adding that his U.S. clients had strong fourth quarters. Still, he cautioned against the idea of reading too much into Q4’s results because it’s being compared to the dire quarters that preceded it.

“Year-on-year comparisons to time periods of Armageddon should show substantial growth,” Kawaja said. “But [clients] are seeing it continue into Q1 and already into Q2… There was really no visibility this time last year when everyone was kind of a deer in the headlights trying to figure out if the world was coming to an end.”

 

You can follow Christopher Heine on Twitter at @ChrisClickZ.

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