Online adspend declines in US in 2009

08 April 2010

NEW YORK: Online adspend fell by 3.4% in the US last year to $22.7 billion (€17.0bn; £14.9bn), but expenditure levels reached a new high in the fourth quarter, suggesting a recovery may now have begun.

According to the IAB US, the industry body, and PricewaterhouseCoopers, the consultancy, the web's market share climbed to 17% in America in 2009 compared to just 8% in 2000.

"Digital media is now a core component of successful advertising and marketing campaigns," Randall Rothenberg, president/ceo of the IAB, said.

"As consumers spend more of their time immersed in digital media, marketers are increasingly reaching them there – building brands online and making digital the central force in their cross-media strategies."

More specifically, paid search took $10.7bn in revenues last year, an improvement of 1.4% on an annual basis, and 47% of the total recorded by the internet as a whole.

Display, including rich media, digital video and sponsorship, posted an increase of 4% to $8bn, boosted in particular by video, which saw an uptick of almost 40% to just over $1bn in all.

By contrast, classifieds registered a contraction from $3.1bn to $2.3bn year-on-year, with referrals and lead generation down from $1.7bn to $1.5bn, and email from $405m to $292m in the same period.

PepsiCo, the food and beverage giant, is one company that has made extensive use of the web in the recent past in an effort to promote initiatives like the Pepsi Refresh project.

Unilever, the FMCG specialist, also intends to double the share of its media budget allocated to this medium, in an effort to "catch up" with the new behaviours being adopted by consumers.

Looking forward, UBS and Deutsche Bank have forecast that the web will enjoy growth of 7% in 2010, with Barclays Capital and Magna predicting this expansion will stand at around 9%.

IDC has pegged this figure at 12.6%, with Citi Investment Research more optimistic still, as it expects the investment by brands in this channel to climb by 14% when measured against 2009.

Overall, this would place the medium's revenues at between $24.1bn according to Deutsche Bank and $29.7bn based on IDC's estimates.

eMarketer, the online research firm, argued expenditure will rise by 5.5% in 2010 to $23.6bn, but also cautioned that the trading climate could still prove challenging.

"Spending since January has become a bit more fluid," said David Hallerman, a senior analyst at the firm.

"That's notably true for search advertising and somewhat for display ads. Whether or not that stronger growth will persist through the rest of the year still depends on continued economic recovery – and that is not yet a sure thing."

Data sourced from IAB/eMarketer; additional content by Warc staff