Online Ads to See Strong Q4 After Good Q3 By: Jason Hahn - Topic: Web - Date: November 22, 2006

According to recent numbers reported by the Interactive Advertising Bureau and PricewaterhouseCoopers, online ad spending reached $4.2 billion in the third quarter of this year, which was a 33% increase from the third quarter of 2005.

Though this figure set a new record, besting the $4.1 billion figure reported for the second quarter of this year, it was only a 2% increase quarter-over-quarter, which marks a noticeable deceleration in revenue growth.  Second quarter Internet ad spending was a 5.5% increase from the first quarter.

Still, it’s clear that online ad spending is very healthy.  For all of 2005, Internet ad spending reached $12.5 billion, while the first three quarters of 2006 have already reached $12.1 this year, with a quarter left.

Sheryl Draizen, senior vice president and general manager of the IAB, called this “very exciting.”

“My sense is that there’s going to be a very strong fourth quarter here,” she said, before adding that “we’re actually seeing marketers increasing their budgets.”

Draizen also pointed to seasonality as the primary reason for the relatively small rise in growth from the prior quarter.

In response to this good news, Merrill Lynch upgraded its forecast for fourth quarter Internet ad spending.  The company is now saying that online ad revenue for the fourth quarter of 2006 will be 30% higher than the same figure for the fourth quarter of 2005.  This is a more optimistic forecast than the original 27% estimate.

For the year, Merrill Lynch thinks that online ad revenue will be 23.3% increase from 2005.  This is higher than the original estimate of 22.5%.

The company also expects that search will grow in prominence next year, and that forecasts for 2007 might have to be adjusted, due to increased spending in social networks and online video realms.

Sources:

http://www.clickz.com/showPage.html?page=3623937

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