Internet ad revenues in the U.S. dropped 5 percent  in the first quarter of 2009, the first significant drop since 2002. But the industry can be seen as holding up relatively well compared with rival forms of advertising.

According to the Internet Advertising Bureau and PricewaterhouseCoopers, total ad revenue in the U.S. from January to March 2009 was $5.5 billion, down from $6.1 billion the previous quarter. While there have been occasional quarterly variations (for example, with advertisers targeting Christmas gift buyers), this is the biggest quarter-to-quarter fall since 2002. More significantly, it’s the first time since then that the figure has been lower than the same period last year.

The cause this time appears to be more closely aligned to the economy. While that was an issue in 2002, particularly after the economic fallout of the Sept. 11 attacks, the main factor then was the bursting of the dot-com bubble which put many of the firms most likely to advertise online out of business.

IAB president Randall Rothenberg said that, despite the effects of the economy, internet advertising was taking a bigger chunk of overall ad spending. “We’re confident that growth will resume as the U.S. economic climate improves. Interactive advertising is the most accountable way to reach consumers—and in this economy, digital media will be a core component of any successful marketing campaign.”

One possible explanation not covered by the figures is firms choosing to shift their spending to sites based outside the U.S., particularly in other English speaking countries. This doesn’t seem likely for U.S.firms (currency variations have meant ad rates for many other countries would have become more expensive for U.S. buyers), but it’s possible firms in countries such as Britain, Canada and Australia now find domestic sites more effective outlets than those in the U.S.

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Entry was posted on Monday, June 8th, 2009 at 12:18 pm under Advertising.

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