Q3 Online Ad Growth Sliced in Half Since Year Ago

Online ad revenues are growing, albeit at a steadily slowing rate. The Interactive Advertising Bureau and PricewaterhouseCoopers pegged Q3 2008 Internet ad spending at $5.87 billion. Revenues were roughly even with last quarter, climbing just 2 percent over Q2.

Perhaps more significant, the rate of growth between Q3 2007 and Q3 2008 was less than half that of the same period between ’06 and ’07. Growth was still considered strong, as online ad dollars rose 25 percent over third quarter 2006 to $5.2 billion in Q3 2007. By comparison, Q3 revenues were up just 11 percent this year.

This year’s second quarter revenues grew 12.8 percent over Q2 2007, but actually dropped slightly on a sequential basis.

Not surprisingly, both the IAB and PWC chalked up the tapering growth to the economic downturn. Still, both touted the online ad sector as one poised to weather the storm perhaps better than other advertising sectors because of its cost-effectiveness and measurability.

The trade group also reported 2008 revenues so far totaled $17.3 billion, a boost of almost 14 percent over the first three quarters of 2007.

Layoffs in the online ad and media industries have come fast and furiously in recent months as firms in most sectors brace themselves for future financial declines and general instability. Digital media firms, ad tech companies and agencies such as Yahoo, SpotRunner, AdBrite, and Razorfish have announced layoffs in the past month. According to ClickZ’s Layoff Tracker calculations, over 4,000 people have been fired from online media and ad companies this year.

Meanwhile, a slew of analyst firms have reduced online ad industry revenue forecasts.

However, digital advertising has been a saving grace for many media firms as ad revenues from other media plummet. News Corp., for instance, recently reported revenues from its digital properties increased 17 percent in its fiscal Q1, while net income fell 30 percent.

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