Internet ad revenue increased in Q1, but growth rate slowed, according to IAB report

The Interactive Advertising Bureau is out today with a report on the “record” Internet advertising revenues for the first quarter for 2012 but, despite a double-digit year-over-year increase, revenue growth was less robust than in the previous year.
According to the industry association, digital ad revenue in the first quarter climbed 15 percent, from $7.3 billion in the first quarter of 2011 to $8.4 billion in the same quarter this year. But between the first quarter of 2010 and the first quarter of 2011, revenues increased 23 percent, the IAB reported last year, indicating a slower growth rate. (In 2010, Internet ad revenue grew 7.5 percent to $5.9 billion, the IAB said.)
As more consumers migrate to the Internet, marketers are continuing to follow. But the digital advertising industry is still under pressure to show top brands and marketers that it can deliver premium experiences and measurable results. Despite innovation in the industry, as IAB President and CEO Randall Rothenberg recently said, 95 percent of brand dollars stay out of digital environments. And click-through rates — long the way the industry has measured effectiveness — continue to be woefully low, leading some to argue for different ways of measuring campaign effectiveness.
Despite the slower growth ater, a recent report from the IAB painted a positive picture for the industry overall. According to the IAB’s 2011 annual report, the industry earned $31.74 billion in 2011, up 21.9 percent from the previous year. In 2010, the industry’s annual revenues were $26.04 billion, which was a 14.7 percent increase over the previous year. As a result of the economic recession, the industry experienced a decline in 2009, but the IAB said that it’s rebounded. The association’s report also underscored the concentration of power in the online ad industry, with the top 50 companies commanding 90 percent of the revenue in the fourth quarter of 2011. Retail advertising drives the largest category of online ad spending, with 22 percent, followed by telecom and leisure travel.
While the rate of growth decreased year over year, ad revenues are still up considerably from 2009, when the industry saw revenues decline during the weaker economy. Sherrill Mane, the IAB’s SVP of research, analytics and measurement, said one quarter of data isn’t enough to get a feel for a larger trend. “The fact that it’s still double-digit [growth] says that [the industry is] still really healthy and hasn’t topped out,” she said.