A study by Pricewaterhouse Coopers on behalf of the IAB shows a drop in the until-recently heady growth rates in online advertising. 2008’s 10.6% growth pales compared to 2007’s growth of 26%, and portends even lower (or negative?) numbers for 2009.

A breakdown by formats:

• The total market hit $23.4 billion in 2008, as previously mentioned a 10.6% increase over 2007’s $21.2 billion
• Search (including contextual) still dominates, with 46% of the market by Q4 2008; its share is equal to approx $10.5 billion annually. Search amounted to 42% of the online advertising market in Q4 2007.
• Display accounted for about $7.6 billion in 2008, or 33% of the overall mix. Q4’s $2.0 billion estimate represents a 4.3% decrease below Q4 in 2007.
• Performance-based advertising (CPC, CPA, CPL, etc) continued to outpace CPM advertising, comprising 57% vs 39% in 2008. In 2007, performance-based stood at 51% vs CPM’s 46%.

Overall, not too surprising. We’ve long expected that performance-based online ads, in their various forms, would weather the spending downturn far better that CPM-based ads, primarily display.\

eMarketer, in response to the results to the study and a possible admission that it overestimated the market (twice) for 2008, cut its growth predictions for 2009 in half, from 8.9% and $25.7 billion to 4.5% and $24.5 billion.

IAB PwC 2008 Full Year

This entry was posted on Monday, March 30th, 2009 at 1:47 pm and is filed under Online Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.