The Internet Advertising Bureau, anxious to prove the effectiveness of its media, distributed a report which says online ad revenue reached $7.4 billion in the fourth quarter of 2010, up 19% from the same period in 2009. That moved internet sales revenue ahead of newspapers, a clear victory of the internet over print. But, it is not that simple.
The industry group also pointed to full-year numbers in the US as a sign of the success of its members. “Released today by the Interactive Advertising Bureau (IAB) and prepared by PwC US, the latest report puts all 2010 Internet advertising revenues at a record $26 billion, up 15% from 2009.”
There are two flaws with the conclusion of the research. One is not stated in the report. The advertising market was in deep recession in late 2009. A robust recovery was almost inevitable.
The second flaw in the presentation of the numbers should give traditional media like newspapers some hope. The rise of online advertising was uneven and distorted by the success of search advertising. Search sales brought in $12 billion in 2010, up $1.3 billion from 2009. “Rich media” revenue, which is supposed to be a critical part of the future for interactive media, was flat at just over $1.3 billion. “Lead generation” revenue, a portion of total online sales which is critical to marketers who want to track results, fell from $1.45 billion in 2009 to $1.34 billion last year.
The devil in the details does not favor all forms of online ad sales.
Some significant amount of online ad revenue comes from internet versions of traditional media such as television and newspapers. Newspapers may not have made up for lost print sales by the revenue from their online products, but the gap does seem to have narrowed in the last year. Old-line media may salvage its prospects through its dual efforts to sell online ads and charge subscription fees for content.
It is natural for one medium to compare its financial success to others. Newspapers are centuries old. The internet has only been around for several decades. The gains by internet advertising are impressive. However, the figures do show that without search revenue the online ad sales industry is relatively small and some internet marketing revenue is not growing at all.
Douglas A. McIntyre
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