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02-24-2005, 08:30 AM
Online advert market slows
Wednesday, February 23, 2005 5:55 PM
- investor.ft.com
By Richard Waters in San Francisco
Last Update:5:55 PM ET Feb 23, 2005
The growth of online advertising in the US slowed in the final months of last year, raising a potential caution amid the stock market euphoria over the growth prospects of companies such as Google and Yahoo.
Advertisers spent nearly $2.7bn on internet advertising in the final quarter of last year, an increase of 24 per cent from a year before, according to figures compiled by PwC for the Interactive Advertising Bureau.
While the numbers point to a continuation of the rebound that has followed the post-dotcom collapse, they show the phase of break-neck growth that drew investors back to the internet sector is passing.
In the first half of the year, internet advertising had grown at a far faster rate of 40 per cent. For 2004 as a whole, online advertising in the US, by far the most developed market, rose by 32 per cent, to $9.6bn.
The latest numbers confirm that online advertising is still advancing strongly, said Pete Petrusky of PwC. However, others warned the deceleration could cause some investors to rethink their more optimistic assumptions about the prospects for companies that rely on online advertising.
High advertising growth rates have had much to do with the new enthusiasm for internet stocks, and "the valuations can only be sustained by similar fundamentals", said David Garrity, internet analyst at Caris & Co in New York. News that the third quarter of last year had seen a decline in spending on online advertising compared with the second also pointed to the market's more subdued outlook.
The IAB revised an earlier estimate, which had shown sequential growth in the third quarter, to record a decline in spending of about 5 per cent, to $2.3bn. Though the third quarter is seasonally weaker than other periods, the market had still grown in both 2002 and 2003.
Wednesday, February 23, 2005 5:55 PM
- investor.ft.com
By Richard Waters in San Francisco
Last Update:5:55 PM ET Feb 23, 2005
The growth of online advertising in the US slowed in the final months of last year, raising a potential caution amid the stock market euphoria over the growth prospects of companies such as Google and Yahoo.
Advertisers spent nearly $2.7bn on internet advertising in the final quarter of last year, an increase of 24 per cent from a year before, according to figures compiled by PwC for the Interactive Advertising Bureau.
While the numbers point to a continuation of the rebound that has followed the post-dotcom collapse, they show the phase of break-neck growth that drew investors back to the internet sector is passing.
In the first half of the year, internet advertising had grown at a far faster rate of 40 per cent. For 2004 as a whole, online advertising in the US, by far the most developed market, rose by 32 per cent, to $9.6bn.
The latest numbers confirm that online advertising is still advancing strongly, said Pete Petrusky of PwC. However, others warned the deceleration could cause some investors to rethink their more optimistic assumptions about the prospects for companies that rely on online advertising.
High advertising growth rates have had much to do with the new enthusiasm for internet stocks, and "the valuations can only be sustained by similar fundamentals", said David Garrity, internet analyst at Caris & Co in New York. News that the third quarter of last year had seen a decline in spending on online advertising compared with the second also pointed to the market's more subdued outlook.
The IAB revised an earlier estimate, which had shown sequential growth in the third quarter, to record a decline in spending of about 5 per cent, to $2.3bn. Though the third quarter is seasonally weaker than other periods, the market had still grown in both 2002 and 2003.