In the first quarter of 2008, the growth in spending on Internet display advertising slowed to 8.5 percent from 16.7 percent growth last year, according to estimates put out today by TNS Media Intelligence. Even with the slowdown Internet ad spending still grew faster than that for TV (1.7 percent), magazines (0.8 percent), newspapers (-5.2 percent), radio (-4.5 percent), and outdoor (2.5 percent). The overall growth of all advertising spending that TNS measures was flat at 0.6 percent growth over the first quarter of 2007.
TNS’s Internet numbers do not include search advertising, only display ads. The quarterly total for all Internet advertising is closer to $6 billion. But this data point is evidence that the Web may not be immune to weakness in advertising spending overall. If the industry dives into a full-blown advertising recession, many Web companies could feel the impact.
This year, TNS only provided the percentage changes. Since it provided absolute dollar values last year, I did my own math and put together the table below. In the first quarter of 2008, $2.9 billion was spent on Internet display ads in the U.S., representing an 8.3 percent share of the $35.1 billion total. That puts Internet display advertising ahead of radio ($2.2 billion), but behind newspapers ($6.0 billion), magazines ($6.8 billion), and TV ($15.9 billion). My figures are rounded, and the percent changes are year-over-year.
It would be good to see the numbers broken out for online video vs rich media vs standard graphical – do you have that?
anybody know any websites that really debate the future of online advertising?
i think a big shift HAS to come in the thinking around this, would love to know what others think
thanks, gregory
and the first page of google results for online advertising IS the problem personified, not an original voice to be found
And I can hear the cracking walls of some ‘interesting’ business models…
I blame it all on rising gas prices ;o).
(I don’t know if this graph will be shown properly, if not, Erick, you can delete my post)
Here is a graph from the IAB and PricewaterhouseCoopers that shows the Internet advertising revenues in the U.S. by advertising formats
ADVERTISING FORMATS
2007
2006
Type of Advertising
$
% share of market
$
% share of market
Display Advertising
4,455
21%
3,685
22%
Sponsorship
636
3%
496
3%
Rich Media (06 including Broadband Video)
1,657
8%
1,192
7%
Digital Video (07 only)
324
2%
N/A
N/A
All Display
7,072
34%
5,373
32%
Keyword Search
8,805
41%
6,799
40%
Classifieds
3,321
16%
3,059
18%
E-mail
424
2%
338
2%
Lead Generation*
1,584
7%
1,310
8%
TOTALS:
21,206
100%
16,879
100%
http://www.iab..../299656?o12499=
Display advertising is overrated as a medium, although you’ll never hear the blogs say it, since their businesses are built on it.
Performance-based advertising IS immune to economic cycles, but in general display advertising is NOT immune. As the economy worsens, the first marketing budget to be eliminated is the spend where ROI isn’t clear.
There is a reason why display advertising holds 25x more inventory than search, yet has half the market share, and why CPM rates continue to decline. It’s the targeting. Display ad networks (which drive 80% of all display inventory) continue to target pages instead of people, if they do any targeting at all.
As I say on my blog at http://snurl.com/2f5yc, display advertising and CPM rates have to stage a comeback, and I think behavioral targeting will be a driving factor. It’s the only hope for today’s horizontal ad networks, provided they can adjust their sales and operational models to be more efficient. Obviously they can’t JUST focus on auto, travel, and shopping.
More tidbits on average CPM rates, contextual vs behavioral, market research, display vs search, social media advertising, etc. at http://kickstand.typepad.com.
It seems as if the 1Q07 and 1Q08 were switched around by mistake
Eric,
Do you know if this includes contextual advertising or not? The numbers of web-based advertising seem awfully low.
Your headline gave me a bit of a start until I read further and found that it was misleading.
I see from the actual article that Internet display advertising did NOT slow in the first quarter. In fact the exact opposite happened; it continued to grow. What slowed was the rate of growth in Internet advertising.
Lee,
The article is about how it went down they must have switched up the Quarters, if they switch it then it will make sense
@6
Thank you for the detailed numbers
Interesting to see the slow down, but it still shows that Internet advertising is one of the strongest areas of advertising today. Print and Radio is down, hmmm, interesting.
Are these number for the states or worldwide?
How has it slowed down if it were 2.7B in 2007 and 2.9B in 2008?
I know we’re super small and not even a blip on the radar, but we only launched a couple months ago and are selling a ton of ads. I think the slowdown just exposes the fact that companies with big budgets aren’t wasting their money anymore on crappy run-of-network placements. Small, niche sites are selling more ads than ever. Ask around…
I wonder how soon will 50% of TV ads goes to Internet or mobile.. 2013?
Please, please do not use this data from TNS. It’s a blackbox of a methodology and is not reflective of any thing really in Online Advertising. Last I looked it didn’t include search, video and much more. It’s not their fault, they just don’t have access to good inputs. I tried to get this fixed when I was the head of the IAB as it was not good data at any level as far as I could ever see. Please TechCrunch, I’d ask you not to use as it gives the wrong picture.
I have some doubts about the numbers myself……because I keep hearing about how Outdoor advertising is very much on the rise, but according to your spreadsheet, it was virtually flat.
Thank you for the detailed
Completely agree Jordan (#8). So many businesses launch on the understanding that online advertising is growing, growing, growing. Given that search accounts for 40% of online spend in the US (60% in the UK), they have to think about whether it’s money they can get at. Banners deliver poorly on the response objective and on brand compared with other formats/channels – hence the decline in CPMs.