Will Ad Revenue Drop for US Property Websites?

The results of the half-yearly Internet Advertising Revenue Report, conducted by PricewaterhouseCoopers LLP for the Interactive Advertising Bureau (IAB), will be met with some anxiety by property portals and websites.

The good news is that overall Internet advertising revenues are up on last year. But the not so good news is that second quarter 2008 figures are slightly lower than the first quarter of 2008. It’s the first dip in revenue since the third quarter of 2004:

“Internet advertising revenue in the U.S. totaled just above $5.7 billion in the second quarter of 2008, a slight decrease of 0.3 percent from the 2008 first-quarter total of $5.8 billion, and an increase of 12.8 percent from the 2007 second-quarter total of $5.1 billion. Year-to-date Internet advertising revenues through June 2008 totaled $11.5 billion, up 15.2 percent from the $10 billion reported for the same six-month period in 2007”.

Search revenue took the largest share of the 2008 second-quarter revenue at 44 percent followed by display banner advertising, which accounted for 21 percent. Classifieds came in third accounting for 14 percent of the revenue, with lead generation and rich media each accounting for 7 percent.

Classifieds revenues are defined by the report as the fees advertisers pay Internet companies to list specific products or services, and included real estate listings as well as employment automotive, auction-based listings and yellow pages. Classifieds revenue has fallen 4 percent over the past few years, from 18 percent of the total in 2004 to 14 percent in the first half of 2008.

The biggest ad spending by industry was by retailers, who accounted for 21 percent, followed by financial services, then computing, automotive, telecom, leisure travel and media. However, retail, financial services, leisure travel and media all had slightly lower spending compared to last year’s figures.

Randall Rothenberg, President and CEO of IAB, commented reassuringly about the results:

“Interactive advertising continues to demonstrate year over year growth as marketers and consumers increase their embrace of digital media. The essentially flat performance we see quarter to quarter reflects in part cyclical advertising trends. Compared to the trajectory in other media and in the general economy, interactive has outperformed because it delivers a level of accountability unmatched by any other advertising medium.”

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