Online Ads: Slowing but Still Growing

The growth in online ad spending on U.S. Web sites slowed in the first half of 2007, compared with the same period last year, but the market is still experiencing a boom, according to the Interactive Advertising Bureau (IAB).

Ad spending hit almost US$10 billion in the first half of 2007, up 26.4 percent from the same period in 2006, and featured the first ever quarterly revenue of over $5 billion, the IAB said Thursday.

"We have every reason to believe, based on torrid sequential growth quarter after quarter, and year after year, that robust growth will continue," said David Doty, an IAB senior vice president.

Growth slowed compared with last year's first half, when spending increased 37 percent over 2005's first half. However, that is mainly due to the fact that spending this year is so much higher than last year, Doty said.

"The growth is on a much larger number. Both quarters and the half year are historic highs in pure dollar amounts," Doty said. "The results are very encouraging."

In the second quarter, revenue reached almost $5.1 billion. "Advertisers understand that they need to move their dollars here [to the Internet] to reach their audiences," he said.

Once again, the search ad format was the largest one, nabbing 41 percent of the spending during the first half, followed by the display format (32 percent), which includes types like video and banners.

Regarding pricing models, performance deals, such as pay per click, accounted for 50 percent of the first half's spending, while impressions accounted for 45 percent. The rest were hybrid deals involving both pricing models.