IDC: Recession or no, Internet ad sales will boom

Times might be tough on the whole, but spending on Internet advertising is growing by leaps and bounds anyway, with total revenues up 23.9 percent in the first quarter of 2008, said an IDC analyst.

According to an IDC report released today, Internet ad revenues jumped from $5.7 billion in Q1 of 2007 to $7.1 billion in the most recent quarter.

During a phone briefing with BetaNews, Karsten Weide, an IDC analyst, provided the following market shares for the top five recipients of Internet ad spending during Q1 of 2008: Google, 24.8%; Yahoo, 11.2%; eBay, 9.4%; Microsoft, 7.1%; America Online, 5.1%.

Google, the major beneficiary of the spending, has inched up an additional 1.7 percentage points over the past year, from 23.1% in Q1 2007, according to Weide, who is IDC's program director for Digital Marketplace and New Media.

IDC's statistics cover both display and classified ads. "We include eBay because we count the listings fees as classified ads," he told BetaNews.

The IDC analyst also suggested that the current economic downturn is actually working to the advantage of Internet advertising. "For marketers, the pressure is on right now to be more [cost] effective with advertising," Weide maintained.

IDC projects that although a potential recession could lower ad revenue across all media by up to 7% in 2008, quarterly Internet ad growth will continue to boom at rates in the 15% to 20% range throughout the year.

"With Internet advertising, you can get a better effect with the same amount of money, or the same effect with less money," Weide told BetaNews.

Why are Internet ads more cost effective? The analyst listed reasons that include an increased ability to target ads, greater user engagement and interactivity, and easier measurement of advertising impact.

"The Internet gives you a much better idea of who is seeing your ads. You might show a commercial hundreds of times on TV -- but with this scatter-shot method, you still won't know," the IDC analyst contended. "Internet ads are also more engaging than ads in other media, which are more or less passive and 'couch potato-y.' [The user can respond] immediately to an Internet ad -- and there is the opportunity for the marketer to convert [the response] directly into a sale."