Is Larger Online Ad Slowdown Coming?

For the first quarter of 2006, online ad revenue reached $3.9 billion, a new record. That is a 38% increase over the first quarter of 2005 and a 6% increase over 2005’s fourth quarter revenue numbers. But, heading into the fourth quarter of 2006, some buying patterns are beginning to show signs of change – and not just in the financial and automotive arenas that Yahoo noted earlier this month.
“Consumer habits are continuing to change and mature,” said David Silverman, partner, Assurance, PricewaterhouseCoopers in a statement. “Companies are effectively learning to devote more of their advertising budget . . . to reach the right audience at the right time.”

The changes include online marketers shifting to other online activities like lead generation, referrals and classifieds rather than display advertising. On the other hand, search ads still represent about 40% of all online ad sales. This type of online advertising is much more reliant on small e-commerce businesses than larger companies like Yahoo and Google.

Exactly what these changes mean for online marketers is unclear, however, if the smaller companies do cut back that could spell a downturn for companies like Google, Yahoo and advertising providers.

Tags: Financial Times, online advertising, Yahoo