Online advertising grows by 27 percent in 2007, idc says

In discussing the company's latest quarterly report about net advertising, IDC analyst Karsten Weide said businesses affected by the deceleration U.S. Economic system will slash other ad budgets earlier paring their online campaigns. "We think there will be some consequence on ad disbursement overall, but we think online ad disbursement will about be unaffected even if there's a depression," he said.

For the first time ever, IDC's research found Google actually lost a bit of marketplace share. "Their domestic help sales growing has slowed down," the analyst said. Google's net U.S. Marketplace share was down 0.5 percent points to 23.7 last one-fourth compared to the prior one-fourth. "It was 50 percentage in Q3 and only 40 percentage in Q4," said Weide. "They're still outperforming everybody but FIM [in terms of growing rate]," he said, referring to Fox Interactive Media. "But the growing is just not fast sufficiency anymore to sustain the electric current market share."

net ad disbursement totaled $7.3 one million million for the fourth-quarter of 2007, about 28 percentage more than the same time period in 2006, according to IDC. For the 2007 calendar year, it reached $25.5 billion, representing year-over-year growing of 27 percentage.

Weide, programme director for IDC's Digital Marketplace: Media and amusement service, said IDC's figure represent only "disbursement on ad space" and do not include "all the other stuff like creative, testing, media planning and measuring."

Additionally, IDC estimates how much gross was garnered by the large online media companies in the U.S. It says Google remained the big dog, snagging 23.7 percent of the marketplace. Yahoo came in a distant second with 11.4 percentage, followed by Microsoft's 5.6 percent, AOL's 5.2 percent, Fox Interactive Media at 3 percent and InterActive Corp. (IAC) with 1.5 percent.

"This is the net U.S. Internet advertising revenue share," said Weide. "It does not count money these companies bill but subsequently pay out to partners. For instance, if you count everything Google bills to advertisers you come out with a gross market share of 33.4 percent. But they have to pay out a whole lot of that money to companies that are part of their ad network. It's not money they keep and can spend on other stuff. Because we are looking at the financial might of these companies, we don't count that in the current market share."in the current market share."

The analyst said he found Yahoo's situation to be interesting. "Yahoo seems to have hit rock bottom, but in the past quarter they actually won some market share domestically," said Weide. "Their domestic growth rate picked up quite a bit. It was 2 percent in Q1 last year and last quarter it was 22 percent. Yahoo gets a whole lot of bad press these days, but if you look at domestic growth they look pretty good. It's pointing upward."

If Yahoo ends up being swallowed by Microsoft, the combined company would have a net U.S. Advertising market share of about 17 percent, said Weide.

For those who fear a coming recession and a repeat of the carnage that came seven years ago, when the so-called dot-com boom went bust, Weide has good news. "Everybody is looking back to the last recession which coincided with the crash of Web 1.0," he said. "Back then, of course, online advertising decreased in real terms. Spending went down in absolute terms," he said. IDC doesn't expect that scenario to happen this time. Why? "Back then a lot of advertisers still saw online advertising as experimental and that's not the case anymore. It's a well accepted means of advertising now and in fact many advertisers say Internet advertising is more effective than other forms."

One other tid-bit that should warm the hearts of those in the business: "Incidentally, our research shows the IAB [Interactive Advertising Bureau] numbers under-count the market," said Weide. "They didn't predict anything for 2007 yet, but if you apply their methodologies they come up with $6.9 billion for 2006 while we came out at $20.1 billion."