Internet advertising revenues in the U.S. were just $5.5 billion for the first quarter of 2009, according to the numbers released Friday (June 5) by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC). Worse, the figure represents a 5% decline over the same period in 2008. Why is it slow?

Despite a perpetual hype and ruckus in the online business, according to market estimates, Internet/online ad revenues are always negligibly low as compared to total ad spend on established media forms including print, TV, and radio. 

The proportion of online ad sales in the total worldwide ad collections is estimated to be less than 10% – mostly around 5–6% during the past few years. What’s the reason that the so-called new media is not picking up steam in the market?

There are many reasons for that. They include lack of ad impact measurement standards, click frauds, disturbing nature of animated ads, layered ad formats, and so on.

What’s IAB’s view? “Interactive advertising has taken its rightful place as a fixture on marketing plans across sectors, which means we aren’t immune to broader economic trends,” said Randall Rothenberg, president and CEO of the IAB.

However, research firm Gartner suggests that creating effective digital advertising operations is crucial for media companies regardless of the current adverse economic climate. It has identified 10 priorities for digital advertising transformation. (Read: Online Advertising: Waiting for the Click Trick)

Conducted by the New Media Group of PricewaterhouseCoopers LLP, the Internet Advertising Revenue Report was launched in 1996 by the IAB, and aggregates data from all companies that report online advertising revenues. 

The data is compiled from information supplied by companies selling advertising on the Internet. The survey includes data concerning online advertising revenues from Web sites, commercial online services, ad networks, free e-mail providers, and all other companies selling online advertising. 

First and third quarter revenue reports are estimates, with the actual figures being released along with second and fourth quarter data respectively. PwC does not audit the information and provides no opinion or other form of assurance with respect to the information. 

According to IAB, it’s comprised of more than 375 leading media and technology companies who are responsible for selling 86% of online advertising in the United States.

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About Rakesh Raman

Have extensive editorial, content management, and integrated communications experience and have worked as a senior tech journalist, analyst, and columnist with different newspapers, magazines, and Web/online properties in India.

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