Story from the Wall Street Journal
The bright spot in the slumping advertising industry is dimming, as a report on Monday showed that U.S. online-ad spending grew 10.6% in 2008, its slowest rate since 2002.
The data suggest the recession is having a significant impact on one of the few drivers of robust growth in media and advertising.
The 2008 figure, $23.4 billion, compares with $21.2 billion in 2007, when online-ad revenue surged 26% from the year before. In the fourth quarter of 2008, growth from a year earlier slowed to a relative trickle, 2.6%, to $6.1 billion. In the same period in 2007, online-ad revenue had jumped 24%.
Pay-per-click rates are rising with no protection against click fraud, and Google Ad-Words advertisers are growing wary.
The report was conducted by PricewaterhouseCoopers on behalf of the Interactive Advertising Bureau, a trade group of media and technology companies.
The slowdown has sobering implications for the future. Research firm eMarketer halved its 2009 growth forecast based on the new data, estimating that online-ad spending will grow 4.5%, to $24.5 billion, compared with a previous prediction of 8.9%.
Nielsen Co. recently reported total U.S. ad spending in 2008 decreased 2.6%, to $136.8 billion. Still, industry executives had been hoping the digital sector would escape the recession more or less intact.
Some online-ad formats are faring better than others. Search advertising is holding up relatively well, at $10.5 billion for 2008, up 20%. Display ads, the second-largest category, are suffering slower growth -- up 8% to $7.6 billion in 2008 -- as marketers scale back branding dollars.
