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| U.S. Online Ad Growth Remains Resilient in 2Q08 Despite Continued Economic Slowdown by Karsten Weide, IDC Despite media reports to the contrary, U.S. Internet advertising continued to grow fast in the past quarter, based on the analysis of the earnings reports of major new media companies such as Google, Yahoo!, Microsoft (Online Services Business) and Time Warner (AOL). According to IDC's Quarterly Wrap-Up Model of the U.S. online advertising market, total U.S. advertising spending increased by 20.1% to $7.01 billion in 2Q08 from $5.84 billion in 2Q07. Despite the current economic crisis, the U.S. Internet advertising industry is not experiencing a pull-back in spending. Rather, online advertising continues a fast, if somewhat muted, growth during 2008, as the current situation accelerates the shift of advertising budgets from traditional into new media. For 3Q08, IDC expects a growth rate of about 22%, which would bring that quarter to a record volume of $7.7 billion. Display ad sales on portals such as Yahoo!, AOL and MSN were slow in 2Q08 as advertisers try to get better return on investment (ROI) on advertising networks in order to save money during the current economic downturn. Yet IDC expects most of those budgets will return to portals when advertisers find that while CPM rates on ad networks are indeed lower, the effectiveness of most of their ad inventory is not as good as that on portals. Microsoft's Online Services Business, the industry's number 4 player, and Fox Interactive Media (MySpace), number 6, both showed strong market share growth in the last quarter, while Google continued to more slowly expand its market leadership. IDC's Quarterly Wrap-Up Model calculates the overall U.S. Internet advertising sales of the most recent quarter and estimates market shares of the major new media companies. It is populated with data from companies' quarterly and annual reports, earnings calls, interviews with company representatives, news coverage, and estimates. To calculate the net U.S. Internet advertising sales market shares, the model looks at the quarterly Internet advertising revenue of the top fourteen U.S. new media operations: AOL (a Time Warner division), Bankrate.com, eBay, Facebook, Fox Interactive Media (a unit of News Corp.), which includes MySpace, Google, IAC, the online operations of the McClatchy Co., Microsoft's Online Services Business (OSB) unit, the online operations of the New York Times Co., ValueClick, the online operations of the Washington Post Co., WebMD, and Yahoo!. write your comments about the article :: © 2008 Computing News :: home page |