Internet Ad Spending Declined in Q1, Says IAB

Companies spent about $5.5 billion on Internet advertising during the first three months of 2009, a 5 percent decline from the same period in 2008.

Some believe the figure reflects the industry’s resiliency during a devastating recession. Forrester Research VP and Principal Analyst Shar VanBoskirk took a nuanced view, suggesting it might be overly simplistic to broadly attribute the economy to the quarterly spending decline. “My research shows that spend in direct response interactive tools is increasing,” she said, referring to search, e-mail, and pay-per-click banner ads. However, she asserted that overall adoption of and spending on branding interactive tools, such as CPM-based banner ads is on the decline.

The results do not mark the first time Q1 spending on Web advertising fell. There was a slight dip between Q1 2001 and Q1 2002 when the dotcom market went bust. However, first-quarter figures in the years since steadily increased through Q1 2008, when the IAB reported spending to be $5.8 billion. That Q1 2008 number was an 18 percent increase over the $4.9 billion Q1 2007 figure, a healthy 6 percent increase over the previous year’s $3.9 billion.

Though VanBoskirk acknowledged the drop in spending is “certainly related to the economy,” the analyst contended people “are sacrificing branding in the name of marketing that will drive more immediate results” and they are “not experimenting with emerging tools as they have in years past because they are being more conservative, sticking with what they know works.”