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Online Advertising Revenues Continue to Surge in First Quarter
The current economic crisis has not affected U. S. Internet advertising spending: Total revenue increased by 23.9% to $7.1 billion in the first quarter (1Q08) compared to $5.7 billion in 1Q07. IDC expects Internet advertising to continue to expand rapidly during 2008 even though advertising spending across all media will most likely be cut back.
Google continued to extend its leadership position in the U. S. Internet advertising market in the first quarter. Its domestic net revenue continued to grow faster year over year than most other players, even as its growth rate continued to decline as the company’s major market, search advertising, continues to mature. The company's estimated net U. S. advertising market share was 24.8% in 1Q08, up from 23.1% in 1Q07.
"What happens is that the current economic crisis puts pressure on advertisers to save money and find more effective marketing channels," said Karsten Weide, program director, Digital Marketplace and New Media at IDC. "Effectively, the crisis accelerates the shift of advertising budgets from traditional media into new media."
Even though IDC anticipates that the threat of a potential recession will decrease ad expenditure across all media by as much as 7% in 2008, IDC believes that quarterly online advertising growth will still increase at rates around the 15 - 20% range in 2008. IDC forecasts that U.S. Internet advertising spending will more than double in five years.
IDC's recently released report, U.S. New Media Quarterly Wrap-Up 1Q08: Internet Advertising Not Affected by Economic Woes (IDC #212379), reports the total volume and the growth rate of U.S. Internet advertising spending for 1Q08, the quarterly domestic ad sales, growth rates and market shares for the top U. S. new media companies and the major events affecting their business.
