Internet Ad Spend Remains Strong; Other Media Show Weakness

Expenditures for Internet display ads grew to $8.4 billion for the first nine months of 2007, a jump of $1.2 billion or 17.2 percent compared to the same period a year ago, according to a study released today by TNS Media Intelligence. In contrast, expenditures on all measured advertising, including television and radio, totaled $108.1 billion during the first nine months of 2007, an increase of $240 million or 0.2 percent for the same time in 2006.

Internet display advertising, in fact, was the only media category to experience double-digit percentage growth. “It continues to grow at mid-teen rates, 16.3 percent in the third quarter, and 17.2 percent year-to-date,” Jon Swallen, TNS senior vice president of research, told ClickZ News. Year-to-date covers the first nine months of 2007.

Still, that increase falls slightly below the 17.9 percent jump reported for the Internet display advertising category in the first nine months of 2006.

While the Internet ad spend remains steady, the overall ad spend continues to show slower growth after experiencing negative growth for the last quarter. “The first two quarters were each slightly negative…in the third quarter we’ve blossomed all the way to 1 percent. It’s still pretty soft,” Swallen said.

Dot-com advertisers account for 46 percent of total Internet spending, while other companies account for the remainder. “The growth is coming equally from dot-com advertisers as well as non-dot-com advertisers,” he said. “And that speaks to the overall strength of the Internet as an advertising medium.”

Despite softness in the financial services sector the past few quarters, financial services continue to allocate a larger share of its budgets to the Internet as compared to any other medium, Swallen said. “There is no other category of advertisers apart from dot-com companies that allocates 22 percent of their budgets to the Internet.”

What’s more, the Internet is attracting dollars from blue-chip advertisers. “The top 50 advertisers as a group are moving money to the Internet at a faster rate than the overall market,” Swallen said. “But the share of budget that they’re allocating to the Internet still trails the overall industry average by two percentage points.”

Year-to-date through September, the Internet accounted for 7.7 percent of the total media ad spend, up from 6.6 percent of the total media ad spend for the nine-month period in 2006. The top 50 advertisers as a group place 5.6 percent of their total media spending on the Internet. “Even though they are moving at a faster rate, they are still trailing the industry norm by two percentage points,” said Swallen.