Media economy
Warm note: Online spending's still hot
By Lisa Snedeker
May 16, 2008 - 8:59:42 AM

The media economy may seem to be in the tank, with ad spending flat in 2007 and not looking much better this year, but there's some consolation: Internet ad spending continues to grow at a strong pace.

The official numbers are in for 2007 from the Interactive Advertising Bureau, and they show spending for the year was up 25.6 percent, to $21.2 billion from $16.9 billion the prior year.

For sure, that pace is down from 35 percent growth in 2006, but that year was a strong one for all media.

That online didn't dip far lower in 2007 speaks to its insulation from the rest of the media economy, as advertisers continue to shift dollars to the web, which they perceived as more cost-effective.

The web's strong growth in 2007 now puts it ahead of the cable TV networks, whose 2007 revenues reached $20.9 billion, according to the IAB.

Within online advertising, search remained the largest segment in 2007, accounting for 41 percent of total revenues, up slightly from 40 percent in 2006. In dollars, search grew 30 percent, to $8.8 billion from $6.8 billion the previous year.

Display advertising, which includes sponsorships, rich media and digital video in addition to traditional display ads, brought in $7.1 billion in 2007, up 31 percent from $5.4 billion in 2006 and accounting for 34 percent of overall online revenue.

The remaining three ad categories, classifieds, email and lead generation, all saw slightly more modest growth during full-year 2007.

Classifieds revenue was up 8.5 percent versus 2006 to $3.3 billion, email ads up 25 percent to $424 million, and lead generation up 21 percent to $1.6 billion.

The online ad economy had a strong finish to the year, with fourth quarter revenues at $5.9 billion, up 13 percent from $5.3 billion in third quarter 2007 and up 24 percent from $4.8 billion in fourth quarter 2006.