Mixed bag for latest IAB online advertising data

The Interactive Advertising Bureau, an organization of digital ad companies, has released its latest Internet advertising revenue data for Q1 2008.

First quarter ad revenue grew 18.2 percent year-over-year to $5.8 billion. However, there was a decline from the end of 2007, with the total dropping just over 1 percent from $5.9 billion in Q4 2007, according to an estimate by the New Media Group of PricewaterhouseCoopers, the actual conductors of the survey.

Unsurprisingly, the IAB touts the year-over-year numbers, rather than the latest Q4/Q1 drop, which is the first quarterly decline since 2004. An analyst with PWC said "the cyclical fourth quarter to first quarter drop in traditional media advertising spend, combined with an overall economic slowdown, resulted in a not so unexpected first quarter slowdown in the growth of online advertising" (emphasis mine).

It remains to be seen if this slowdown is real or just cyclical, especially since this data is merely an estimate. However, combined with a recent report that online ad prices have dropped since March, it could give advertisers and website operators pause. The PubMatic Ad Index showed a 23 percent drop in Internet ad rates between March and April 2008, before leveling out between April and May.

Is the down economy hurting Internet companies? Maybe -- but certainly not all of them. Google, the largest Internet ad publisher, reported increased revenue and profits from Q4 '07 to Q1 '08.

However, we'll be closely watching when the Q2 '08 numbers come out. If the down trend continues, it might be time to be concerned.

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