October 21, 2002 2:42 PM PDT

Year starts slow for Web ads

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October 9, 2002
Online advertising sales dropped by 20 percent in the first six months of the year compared with 2001, a new study shows, cementing concerns about a prolonged ad slump.

Web ad revenue totaled $2.98 billion for the first half of 2002, according to industry trade group Interactive Advertising Bureau and consultancy PricewaterhouseCoopers. That marks a 22 percent decline from the previous six months and a 20.8 percent drop for the comparable time frame in 2001. The quarterly survey, called IAB Internet Ad Revenue Report, showed sales in the second quarter that reached $1.46 billion, a 4.1 percent dip from the first quarter.

The survey is conducted independently by the New Media Group of PricewaterhouseCoopers.

"The results for the first half of this year come as no surprise to the industry and continue to reflect the weakened media market, which all ad sectors have experienced for the first half of 2002," IAB CEO Greg Stuart said in a statement.

"That said, we are heartened by some very clear indicators that the overall market is improving," he added.

Stuart pointed to industry research and positive public statements from several top Internet media companies as evidence of a potential uptick in sales for the fourth quarter. Yahoo, for example, said its ad sales grew by more than 20 percent in the third quarter, in part because of its search marketing alliance with Overture.

"While 'recovery' may be too strong a word at this time, it is quite possible, especially as we head into the traditionally robust fourth quarter, that a turnaround is in the offing," Stuart said.

The IAB announced on Monday results from a cross-media study based on a campaign for McDonald's, which showed that marketers can increase awareness of their brand names when they boost their presence on Web properties.

Still, search engine advertising--the equivalent of direct marketing on the Web--drove the highest gain in ad spending, according to the report. Keyword search, or ad placement in related search results, rose from 3 percent in the first half of 2001 to 9 percent in the first half of 2002. However, the popularity of banners slipped by 4 percent in the same time period, from 36 percent.

Major Web sites are raking in most of the advertiser dollars. According to the report, the top 10 media companies, including Yahoo, Microsoft's MSN and AOL Time Warner's America Online, account for 76 percent of advertiser spending.

Of all deals, 90 percent were cash and 10 percent barter in the second quarter of this year. For the first quarter of 2002, the IAB showed ad sales at $1.52 billion, slightly down from the $1.55 billion it had previously reported.

 

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