U.S. Online Ad Market Rebounds in First Half of 2010

Marketers in the U.S. boosted their online ad spending in the first half of 2010 after holding on tight to their purse strings for most of last year.

Online ad revenue increased 11.3 percent to US$12.1 billion during the first six months of the year, compared with the same period in 2009, according to the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC).

That is the market's highest revenue total for a first semester. The previous first-half record was set in 2008, when spending reached $11.5 billion.

As things stand, online ad spending in 2010 is on track to reach its highest annual level, the IAB and PwC said in their latest Internet Advertising Revenue Report, released on Tuesday. So far, the highest-ever annual revenue total was reached in 2008 with $23.4 billion.

It's also clear that the U.S. online advertising market is in growth mode once again, after revenue shrunk 3 percent to $22.7 billion last year, when economic troubles and concerns prompted marketers to cut back during the first nine months.

"While the recession clearly affected short term growth in 2009, with double digit growth in both search and display during the first six months of 2010, the long term prospects continue to be strong," David Silverman, a PwC Partner, said in a statement.

The most popular ad format continues to be search, like the pay-per-click text ads that run along with Google search results. Search ads generated 47 percent of all spending in the first half of 2010, followed by display ads, such as banners, with 36 percent. Also of note was the spending on video ads, which reached $627 million, up 31 percent compared with 2009's first half.

The retail industry ranked first in online ad spending, accounting for 20 percent of the first-half's total, followed by telecommunication companies (14 percent), financial services providers (12 percent), automotive companies (11 percent) and computing vendors (10 percent.)

While online ad sellers like Google, Yahoo and Microsoft should be happy about the revenue jump, the industry faces other challenges. For example, online ad service providers are under increased scrutiny from government agencies and privacy watchdogs over practices to track people's Web activities in order to fine-tune ad targeting.

As those practices are probed in the U.S. and abroad, online advertisers are pledging to monitor themselves, while critics are pushing for specific laws and regulations.

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