Internet Advertising Shows Slight Decline

By: Jonathan Angel (Adweek Magazines' Technology Marketing) There's a modicum of good news in the Interactive Advertising Bureau's latest Internet Ad Revenue Report, released late Tuesday. Internet advertising in the United States held steady in the third quarter of 2001, totaling $1.792 billion -- down only 4% from the second quarter's $1.87 billion.

And, while the first nine months of 2001 revenue -- $5.55 billion in all -- is lower than that of the 2000 boom year, it's down by a relatively modest 8.4%. Relative to the economy overall, Internet advertising has been amazingly robust.

"While the online revenue reported has shown little change from the previous two quarters, the fact that our industry is holding steady should be looked at as a positive sign," said IAB President and CEO Greg Stuart. "The Internet is holding its own against what we have been hearing about other advertising sectors, indicating that, contrary to popular belief, advertisers are not deserting the medium."

The IAB suggests that traditional advertisers are maintaining or increasing the level of their online presence, and that the Interactive Marketing Unit guidelines issued by the IAB earlier this year are working. A recent AdRelevance survey concluded that these units are gaining traction, with their usage growing significantly.

"Traditional advertisers are devoting a greater percentage of their budgets to online advertising, and are loath to desert the medium that they all know holds the greatest future potential for them," said Tom Hyland, chair of the PricewaterhouseCoopers New Media Group. "There is no more gravy train, but the slight decline in this quarter's revenues bodes well."

Another ongoing trend noted by the survey is the gradual consolidation of revenues within large media companies such as AOL Time Warner. For example, the top 10 companies had 75% of revenue in the second quarter, and this went up to 76% in the third quarter. Internet ad revenue statistics are collected continuously and independently by PricewaterhouseCoopers, and then released by the IAB on a quarterly basis.