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Internet ad slump matches off line media
Friday, May 24 2002
by Andrew McLindon

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The US on-line advertising market fell by 12 percent during 2001 reflecting the trend in more traditional media.

According to the Internet Ad Revenue Report, Internet advertising for 2001 in the US totalled USD7.2 billion, which was down sharply on revenues generated by the sector in 2000. The report also showed revenue in the fourth quarter of 2001 was USD1.7 billon, a fall of 7.5 percent from the previous quarter.

However, the Interactive Advertising Bureau (IAB), which sponsors the report, said that such weak revenues were "not unexpected" given the falls in ad spend on traditional media over the last year and claimed that when compared to other data sources, the results for the Internet market actually compare favourably with other sectors.

For example, data compiled by eMarketer shows that CMR The Myers Report and McCann Erickson all rate the decline in ad revenue for broadcast television at 11.8 percent, 12 percent and 13.8 percent respectively for 2001, the IAB said in a statement. "Additionally, national spot radio decreased by 20.4 percent according to CMR and 19.4 percent according to McCann in 2001."

The IAB also said it would be a mistake to compare on-line ad spend in 2001 to that in 2000 due to the latter being a "banner year for all advertising sectors." In addition, it commented that the decline of the American economy in 2001 and the aftermath of 11 September, which saw advertisers virtually halt their activities for a month, had also impacted on the results for the last year.

Greg Stuart, IAB's president and chief executive officer, said that he expected the market to pick up during 2002 and as proof pointed to a recent report from Thomas Weisel Partners that predicted that 71 percent of the leading on-line ad sellers will be profitable in 2002, which compares with 42 percent in 2001.

Colin Joyce, the spokesperson for IAB in Ireland, told ElectricNews.Net that he expected the Irish on-line ad market to have actually grown in 2001, mainly due to an increased number of advertisers using the medium. However, as Joyce noted, the Irish market is some 18 months behind the US Internet advertising market and it not as well developed.

IAB figures show that on-line ad revenue in Ireland in Q3 2001 was EUR1.5 million and Joyce predicted that figures for Q1 and Q2 in 2002 would show "significant growth" in the market here. Figures for Q4 2001 are due to be released by the Irish branch of IAB in the coming weeks.

"The Irish market in 2002 will grow rapidly on last year as advertising budgets begin to be freed-up and more companies realise the benefits of Internet advertising," said Joyce.

The IAB's Internet Ad Revenue report, which is carried out and complied by PricewaterhouseCoopers, also found that the most popular ad formats during 2001 were banner ads (36 percent of ad spend), sponsorships (26 percent) and classifieds (16 percent). The new breed of on-line ads such as interstitials and superstitials accounted for less than five percent of the total spend.

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