Internet advertising: It keeps growing and growing

The Interactive Advertising Bureau said today that advertisers spent $5.8 billion in the first quarter of 2008, up 18.2% from the year-earlier period. Don't they know there's a recession on?

Well, yeah, says Randall Rothenberg, president and chief executive of the trade group. That's why they're spending on interactive ads.

"In times of economic strain, marketers and agencies are under more pressure to prove their results," he said. On the Web, advertisers know how many people clicked on their ads and how many people ignored them. That's tougher to prove in, say, something like radio. Who knows how many people listen to those awful men's hair transplant ads, and how many just turn down the volume or change the channel?

The online numbers look especially good when compared with the advertising industry as a whole. On Monday, Nielsen Monitor-Plus reported that first-quarter ad spending was flat compared with the same period last year. According to Nielsen, while ad spending on cable TV was up 12.9% from last year, spot radio was down 4.9% and network TV fell 3.4%.

And the online numbers look really, really, really good in contrast with ...

... newspaper ad revenue, which saw the biggest-ever quarterly drop in the first quarter, according to the Newspaper Assn. of America (Blogging will save us all!). According to Bloomberg, print advertising sales fell 14% in the first quarter.

Where is all the money going? Mostly to the Internet, of course.

"It's not that advertisers are pulling back on spending -- it's more of a shift toward the Web and away from traditional spending," said Brad Agens, senior vice president of advertising sales at Los Angeles online media rep firm Gorilla Nation. His company, which sells ads on sites such as Barbie.com and Marvel.com, has seen an uptick in dollars spent in online video of late, he said.

Lest you think about abandoning your newspaper job and going to work in online advertising, here's one note of caution: Spending on Internet advertising actually dropped slightly for the first time in 13 quarters. While advertisers spent $5.8 billion in Q1, a big increase over Q1 2007, they spent $5.9 billion in Q4 2007.

That could be because of holiday ad spending -- think of how many Christmas-themed ads you see in the months before the holiday. Or it could be because the industry is "reaching maturation," as Interactive Advertising Bureau CEO Rothenberg says -- as the numbers get bigger and bigger, it's harder to maintain those stunning growth rates. After all, Q4 2007 revenues were the highest ever recorded.

Or, who knows, it could be because there's a recession on. Tune in for Q2 numbers to find out.

-- Alana Semuels

Semuels, a Times staff writer, covers marketing and the L.A. tech scene

Photo: Depression Era Breadline, by unknown. From the National Archives, courtesy of Flickr

Comments

[Mike Wilbon]

Wow, that's something really nteresting to me because I don't know how c arefully viewed internet ads are. Even if you notice it, I believe that 99% don't bother to click on it unless, in all honesty, it is some dating service and the persnn s horny. Yeah, right to the point

[Mark Kreider]

It's worth noting that the articles research was provided by an internet advertising trade group and all the numbers quoted are in percentage of change, which favors the little guy (the internet).

A report by TNS Media Intelligence gave internet advertising 7.6% share of the total 2007 US advertising expenditures of $149B, compared with National TV (32%), Magazines (20%), Newspapers (18%), Local TV (11%), Radio (7%) and Other (4%). And this 'Advertising' sample group is doesn't include all the efforts spent on catalogs, packaging, in-store advertising, promotions, tradeshows, etc...).

I think the topic of the article is really The Internet rather than advertising so the pro online ad spin is OK, but I wouldn't want the average business person to think they should put a lot of their eggs into the internet basket. The internet is growing, but many other vehicles are more powerful and larger.