Peter Kafka

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Pessimists: Web Ad Growth Ground to a Halt Last Year; Optimists: Web Ad Growth Still Exists!

half-fullHere’s your daily chance to pick: Glass half-full? Or who the hell broke this glass?

The opportunity: The Interactive Advertising Bureau’s numbers for the fourth quarter of 2008–remember all the way back then? If you do, then you won’t be shocked to see that Web advertising slowed way, way down during the last three months of the year. And it did much worse than that at some shops, like Time Warner’s (TWX) AOL.

If you’re a professional optimist, like the IAB’s Randall Rothenberg*, you’ll note that ad dollars are still moving from offline venues to the Web, which makes sense, because that’s where people’s eyeballs have moved. For the year, Web ads grew 10.6 percent, while the overall ad market contracted by 2.6 percent.

But the sourpusses among us will note that Web ads ground to a halt at the end of the year. The IAB says U.S. Web ads grew a mere 2.6 percent during Q4, to $6.1 billion. The year before, they had grown at a 24 percent clip.

Here’s a sector-by-sector breakdown of┬álast year’s market. No surprise: The lion’s share of the business goes to Google (GOOG), as it does every year. (Click to enlarge).


Side note: The video ad market, which was supposed to be a geyser, still has yet to be unleashed, despite the best efforts of YouTube, Hulu, et al. Advertisers spent just $734 million on digital video–about three percent of the market. Positive spin: That’s more than twice the amount they spent in 2007.

* Prior to his career as a professional optimist, Randall used to do excellent work reporting on the ad business. Highly recommended: “Where Suckers Moon,” his 1994 book that went behind the scenes during the creation of a Subaru campaign. Great stuff.