The feeling that “things are getting better” is becoming pretty pervasive among the conversations online ad execs are having, but the recent spate of reports suggest that it would be more accurate to say “things aren’t getting worse.” That’s what the latest quarterly ad data from IDC’s Karsten Weide says (sub. req.), as he found global online spending slipped just 1 percent to $14.6 billion. Compared to IDC’s Q2 ad spend tally, Q3 wasn’t all that different, as all regions except for Asia experienced declines.
Meanwhile, the internet ad business in the U.S. fell 4 percent to $6.4 billion, marking Q3 as the third decline in a row. IDC expects another down quarter for Q4, though the decline is likely to slow to just about 1 percent. Actual growth is expected to return in Q1– or 2Q by the latest. In keeping with long-term trends that go back a few years, search ads will show the most strength, followed by a comeback in display ads and classifieds.
Looking back over the last two years, when the recession first hit, online ad growth rates have fallen consistently. In Q407, online d growth was 44 percent. In Q209, that rate was a negative 5.6 percent. So Q3’s slightly down figure can be considered a notable improvement, even if it’s not exactly cause for celebration.
In the U.S. specifically, the search sector has some surprises. While the search space has continued to hold its own through the wider downturn, it looks like the boost is coming not just from the dominant Google (NSDQ: GOOG), but from Microsoft’s Bing. Since launching in May, Bing’s market share gains have contributed to the category’s overall revenue increases. Search has gone from a 6.1 percent increase in revenues in Q209 to 6.8 percent last quarter. As Weide writes, “Interestingly, this success came mostly at the expense of Yahoo (NSDQ: YHOO) Search, not at Google’s expense. Microsoft’s estimated search ad revenue grew by 5 percent or $11 million year on year, but it should also be noted that the company currently spends about twice as much per quarter on the Bing marketing campaign.” Still, Bing has had nowhere to go but up and Microsoft’s aggressive marketing efforts have made a big difference. But it’s worth wondering whether Bing will have staying power once the marketing campaign ends and the newness of the search system fades.
Turning to display, as parent Time Warner’s Q3 earnings proved, AOL’s total online ad revenue continued its downward spiral, falling 23 percent. It also shows the job CEO Tim Armstrong faces as he works toward spinning off the company from Time Warner (NYSE: TWX). AOL has nearly lost half of the market share it had four years ago and its share of the overall U.S. online ad market was 4.4 percent in Q3, almost half of the 8.2 percent slice the company held in Q105.