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Internet advertising slumps in first quarter

A 5 percent drop in revenue from the fourth quarter is the biggest in many years, in a tally from the Interactive Advertising Bureau and PricewaterhouseCoopers.

Spending on Internet advertising took a big drop in the first quarter of 2009 as troubles across the broader economy took their toll.

For the three-month period, Internet advertising revenue in the U.S. was $5.5 billion, down a notable 5 percent from the $6.1 billion for the fourth quarter of 2008, according to a report Friday from the Interactive Advertising Bureau and PricewaterhouseCoopers.

Interactive Advertising Bureau/PricewaterhouseCoopers

Aside from a handful of smaller quarterly declines, Internet advertising revenue has risen steadily since the middle of 2002, as the sector began to recover from the dot-com bust.

The IAB put a positive spin on the first quarter's downward motion.

"Consumers are spending more and more time with interactive media. For this, and other reasons, interactive media continues to gain share of marketing spend." Randall Rothenberg, president and CEO of the IAB, said in a statement. "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."

Internet companies such as Yahoo are banking on businesses continuing to migrate to online advertising.

"Your brand is not defined by 20 keywords. You have to put a persona out there," Yahoo CEO Carol Bartz said Wednesday at a luncheon with Wall Street analysts, talking about the potential allure of online display or video advertising to businesses used to buying ad time on television. But, she said, Internet ad sales forces need to get rid of some of the friction in their line of work that isn't there on the TV side.