How is Internet advertising faring in this bad economy?
With many news services, it's the dire predictions that make the boldest headlines; but if the headline happens to be, "Advertising Growth Declines," then suddenly the news looks a little more...measured.
So the news emerging this week from the Internet Advertising Bureau, which collects information submitted by surveys from members who sell advertising over the Internet in the US, is that the rate of growth in the ad industry has essentially flattened. According to IAB statistics, ad revenue among US-based ad dealers who are members (this should account for Google and AOL's Platform-A, among others) grew to $5.865 billion for the calendar third quarter, up 11% annually over the previous year's Q3.
It's that 11% mark that's not moving, as is indicated by the IAB's explanation: "While double-digit annual growth continues, the quarter-to-quarter curve remains relatively flat compared to recent past performance." It's also not the 20% or even 25% annual growth rate that analysts were projecting for US ad sellers in 2006, for the four-year period hence.
How exactly does this break down? The only way we found this figure makes sense is if you account for US-based dealers whose platforms sell to US-based companies. In its fiscal third quarter ending last September, Google reaped a total of $5.35 billion in revenue from advertising worldwide. With just less than half of that revenue coming from the US, by Google's estimates, about $2.5 billion of that revenue comes from US advertisers.
Granted that the calendar Q3 and Google's fiscal Q3 are not in sync, Google alone still appears to account for 42% of IAB's figures -- this for a group that has some 375 members. Google's own annual revenue growth rate is 31%. So if you take just one player out of the picture, revenues from Google's market partners must be coalescing to bring that growth figure back down to 11%. And that indicates the proverbial glass be less than half-empty.