Online Ad Revenues Up Despite Consumer Concerns

U.S. advertisers continue to increase their spending on the Internet, according to a report this week that found online ad revenues totaled nearly $10 billion during the first half of 2007 — a 26.4 percent increase from the same period last year.

The report from online advertising’s chief industry association, the Interactive Advertising Bureau (IAB), also found that second-quarter revenues for U.S. Internet advertising reached $5.1 billion — up 4 percent from a $4.9 billion first quarter total.

Those figures come despite a number of recent developments that threatened online ad spending. For one thing, the Conference Board reported last week that the Consumer Confidence Index declined in August, and that last month, fell to its lowest point in two years.

Despite that report, consumer-targeted advertising still remains high on companies’ spending lists. The IAB report, conducted by PricewaterhouseCoopers, found that consumer advertising continues to lead all sectors, with 54 percent of 2007 second-quarter revenues. The figure is even up from the 49 percent reported during the same period in 2006.

Financial services, typically one of the industry’s biggest spenders, accounted for an additional 15 percent of online advertising revenues — down only 1 percent from last year. That’s good news considering the ongoing crisis in sub-prime mortgages and the impact it’s having on many of the nation’s financial institutions.

“The torrid growth of interactive advertising revenue persists and these results are really no surprise, but very welcome news,” said IAB President and CEO Randall Rothenberg, in a statement. “More and more marketers have embraced the reality that interactive is the fulcrum on which their brand strategies need to be based and we expect robust growth to continue.”

Led by Google, search revenue continued to garner the lion’s share of online ad spending. The category accounted for 40 percent of second-quarter revenue, in line with second-quarter performance in 2006, according to the report.

Meanwhile, display-related ads — including static, rich media and broadband ads –accounted for 33 percent of the quarter’s total take. That figure is up 2 percent from a year ago.

Classified ad revenue came in at 17 percent for the quarter, down from 20 percent, while lead generation deals took 8 percent of 2007 second-quarter revenues, a 1 percent increase from the same quarter last year.

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