About one news source picked up the huge clue to recessionary forces that lay buried in the IAB Internet advertising revenue report published this week, after the work was done by PriceWaterhouseCoopers to collect the data together.
The first quarter of online advertising sales in the US was larger than the second quarter. While that might not be a major issue for traditional advertising, it is the first time that we can remember there being no increase in the advertising expenditure on the internet, quarter to quarter since internet advertising began.
The tiny 0.3% decline quarter to quarter might be explained by seasonal variation, but it means that recessionary forces are in play in the advertising market already, at least in the US.
Internet advertising revenues there for the first six months of 2008 were $11.5 billion, which was another half-year record up 15.2% over this time last year. The second quarter was also over this time last year, by 12.8%, but was down sequentially over last quarter.
Search advertising continues to lead, and extend its lead, just as Google continues to extend its lead within this segment. It totaled $5.1 billion for the first six months, up 24%, while display-related advertising reached $3.8 billion up 19%. Display-related advertising includes Display Banner ads, Rich Media, Digital Video, and Sponsorship.
Digital Video advertising, although still a tiny amount of the total advertising on the internet, was up from $100 million to $345 million in one year, which represents the biggest leap of any kind of advertising online, some 245% growth.
The IAB put out platitudes about year on year growth but failed to ring any alarm bells in its corresponding assessment, claiming that the flat performance seen in the quarter to quarter numbers was at least partly cyclical. We assume the other parts are economy based.
Cost per thousand sold advertising has fallen 1% since last year and is now 44% of the total, while performance based click through advertising has grown slightly.
IAB figures for the UK showed that internet advertising expenditure grew to £1.7 billion in the first half of 2008, a 21% year on year, at a time when in the UK all major advertising mediums including TV, press, outdoor and radio, experienced falls in expenditure. The total advertising market was a fraction under £9 billion, down 0.7% year-on-year and would have experienced a 4.6% decline without the internet’s growth.
Again search advertising grew by 28% and made up £981 million taking 58.3% of the market.
There doesn’t seem to be the same slowdown in UK and other European markets for online advertising sales compared to the US, so either they are behind the US in the penetration of online advertising or there is less recessionary evidence here, or both.
A separate report from The European Information Technology Observatory in Berlin agreed roughly with the global growth rate, at 13% but said that online advertising in the US would reach €13.6 billion ($18.6 billion) which looks like it is somewhat below the PwC figures depending on what happens in the next 6 months. The report also said that across Europe there would be a growth of 31% to 9.1 billion Euro ($12.44 billion).