Online Ad Revenue Continues to Drop

By Mikael Ricknäs

Stockholm - The economic downturn continues to weigh on online ad spending. The worldwide market dropped by 5 percent during the second quarter compared to the same time period last year, according to market research company IDC.

During the second quarter last year companies spent US$14.7 billion on online search ads, display ads and classifieds. This year that sum had dropped to $13.9 billion, IDC said. The only region where sales didn't contract was Asia/Pacific and Japan, which saw slight gains, according to IDC.

The industry will continue to see further drops during the third and fourth quarter and will likely have to wait until mid-2010 until it sees growth again, according to IDC.

During the second quarter online ad spending U.S dropped by 7 percent year over year. The U.S. market is now worth US $6.2 billion, compared to $6.6 billion last year.

Classifieds were hit the worst, contracting by 17 percent, which in turn resulted in being the worst hit among all the major publishers. It experienced a 31 percent decline. Search ads were the least affected, which helped Google post a small gain, IDC said.

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