May 15, 2008, 3:21 PM — U.S. online ad spending increased 26 percent in 2007 over 2006, as the Google-dominated
search format not only remained the market's largest, but also increased its
share of the overall pie.
Online ad spending in the U.S. reached US$21.2 billion last year. Search advertising
accounted for 41 percent of the spending, one percentage point more than in
2006, the Interactive Advertising Bureau reported on Thursday. In 2007, spending
in search advertising grew 30 percent over 2006, explaining the continued financial
success of Google, which broadly dominates this format.
It also partly explains Microsoft's continued sense of urgency at trying to
boost its underperforming Internet ad business, which hasn't been able to achieve
its financial and usage goals, specifically in search advertising, despite heavy
investments in recent years. Microsoft cited its desire to compete better against
Google as a key incentive in its attempt to acquire Yahoo, an effort that Microsoft
has, at least for now, given up on.
Display advertising, which includes formats like banners, sponsorships and
video, accounted for 34 percent of the spending, according to the IAB. This
is a category in which, according to IDC, Yahoo leads and Google has a minor
position. The third-largest format was classifieds, with 16 percent.
A majority of the spending -- 55 percent -- came from companies advertising
products and services for consumers, such as retail, automotive, leisure and
entertainment companies. Providers of financial services made up the second-largest
category with 15 percent of the spending.
In 2007's third quarter, spending reached almost $5.3 billion, and in the fourth
quarter it almost hit $6 billion, according to the IAB.
The 10 largest online ad sellers racked up almost 70 percent of the spending,
while the top 50 captured 89 percent.
