IDC: Worldwide Online Ad Spending Drops Slightly in Q3

Global online advertising spending fell slightly in the third quarter, but there are signs that the market may be recovering and could start growing again soon, according to IDC.

Marketers spent US$14.6 billion, down 1 percent compared with last year's third quarter, as all world regions saw online ad revenue contract except for Asia-Pacific and Japan. In the U.S., online ad spending fell 4 percent year-on-year to $6.4 billion.

Still, the silver lining is that spending decreases are getting smaller. For example, global ad spending fell 5.6 percent in the second quarter of this year, while the drop in the third quarter was only 1 percent, IDC said Wednesday.

While online ad spending is expected to shrink by about 1 percent in the U.S. in the fourth quarter, IDC expects the U.S. market to swing back to a growth pattern in next year's first or second quarter.

Microsoft's Bing search engine, launched in late May and promoted heavily via an aggressive marketing campaign, has increased its search advertising market share in the U.S. from 6.1 percent in the second quarter to 6.8 percent, mostly at the expense of Yahoo. The question is whether Bing will retain this gain once the marketing campaign ends, IDC said.

Meanwhile, AOL's fortunes in online advertising continue to decline. Its online ad market share in the U.S. has fallen from 8.2 percent at the beginning of 2005 to 4.4 percent in this year's third quarter, according to IDC. AOL's parent company Time Warner has plans to spin off the struggling Internet division before the end of this year.