Web ad sales rise slightly from prior quarter

By RACHEL METZ NEW YORK
High Tech News, AP - 2 months ago

Despite the bad economy, U.S. Internet advertising revenue rose in the third quarter, according to an analysis released Thursday.

The report from the Interactive Advertising Bureau and PricewaterhouseCoopers LLP said that online advertising revenue totaled almost $5.9 billion in the third quarter, up 11 percent from the same period last year. It marked a 2 percent rise from the second quarter.

Companies that depend on Internet advertising, including Google Inc., have seen their shares plummet recently on fears that the economy will inhibit growth in what remains a relatively small market. About 10 percent of all money spent on advertising in 2008 is going toward online ads, according to U.K.-based advertising company ZenithOptimedia.

Because of the economic climate, David Silverman, a partner at PricewaterhouseCoopers, said the third-quarter growth is "nice to see."

"I think given the economic environment, seeing any increase in any economic activity — let alone advertising — would be a bit of surprise, but speaks maybe to the strength of interactive advertising," he said.

Silverman thinks advertisers will keep spending on online ads, especially in an economic downturn, because they are often paying for ads based on performance — such as when a consumer clicks on an ad to visit an e-commerce site.

"They actually see they're getting a result for their dollars spent," he said.

For the first nine months of the year, online advertising revenue totaled $17.3 billion. This compares with $15.2 billion in the same period last year.