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Internet Ad Spending Booms by 54 Percent

Advertising for the Internet segment sizzled and national cable networks chalked up healthy increases in Q1 2006 vs. Q1 2005, according to a Kagan Research survey that also found growth in local cable underwhelming.

Internet advertising posted a hefty 54 percent increase in ad revenue in the January-March period, according to the Quarterly Barometer survey in Kagan newsletter Broadband Advertising. That's off slightly from 56 percent growth in Q4 '05, as the accompanying table indicates.

"With over 50 percent year-on-year growth in both quarters, I don't think one could say there's any deceleration yet," says Erik Brannon, associate analyst at Kagan Research. "The real question mark is how long it can keep going at this red-hot pace before it settles into a more traditional growth pattern like the one national cable networks are in now."

Internet leader Google chalked up a 79 percent gain in Q1 ads, though the biggest percentage gain came from Barry Diller led-IAC Interactive registering a 1,208 percetn hike from just $9 million in Q1 '05 to $117.6 in Q1 '06. IAC advertising bulked up from the acquisition of search engine Ask.com (formerly Ask Jeeves) in 2Q '05, which was revamped and heavily promoted.

The national cable network category chalked up an 11 percent gain in Q1 '06, which Brannon feels is a solid and stable showing. Among the leaders, News Corp. registered the biggest increase as ad revenue at its eight channels � which include Fox News Channel and FX � jumped 32.5 percent.

Local cable advertising mustered just a 3 percent increase in Q1 '05, which is anemic though better than its 2 percent decline in Q4 '05. Brannon feels this sector will boom eventually, but there are few indications it will happen soon. The lackluster local cable ad category is still sizeable at $646 million in Q1 '06, based on a survey of seven of the top eight cablers.

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