Reaching as far back as the 1960s, the Internet was spawned when the U.S., through research projects in conjunction with several military agencies, was contracted to institute a fail-safe and robust computer network. The research, with the help of the National Science Foundation, ignited global involvement in the creation of new networking technologies, which ultimately led to the commercialization of a worldwide network in the mid 1990s,

Today, the Internet provides nearly a quarter of the Earth’s population the freedom to chat online, share and transfer files, play gamed, conduct commerce, engage in social networking, publish materials, watch videos on demand, teleconference and telecommute via the services provided by the Internet.

With people using the Internet for a variety of needs, companies place advertisements on Web pages and search engines to entice sales and product identification. During the first six months of 2009, U.S. companies generated nearly $11 billion in online ad revenues, despite spending 5% less than they had in the same time frame last year.

The 5% decline in spending broke a string of 24 consecutive quarters in which spending increased, dating back to the 1st quarter of 2003. If spending continues to decline throughout the remainder of the year, it would mark the first time since 2002 that spending posted an annual decrease. From 2006 through 2008, spending increased 35%, 26%, and 11% respectively.

However, the $11 billion in sales did come in 5.3% lower than the first half of 2008. The more than 5% loss represents a total loss in revenues of more than $610 million. Even with the seemingly substantial loss in ad revenues generated, it pales in comparison to the overall advertising industry’s decline, which fell 15.4%.

Randall Rothenberg, chief executive at Interactive Advertising Bureau remarked, “We are in one of the most difficult economic slumps in decades. Interactive is one of the advertising sectors that have been least affected. In recent years, the digital revolution has driven a transformation of how consumers experience advertising and media. As the economy improves, we’re confident that brands will devote an even greater share of their budgets to reaching consumers as they make interactive media a larger part of their lives.”

With the economy mired in the worst recession since World War II, online advertising accounted for 47% of all marketing mediums throughout the U.S. That comes in just above 2008’s 44% during the first six months of the year.

An emerging category for online advertising is now video ads, in which spending surged more than 38%. Nevertheless, spending on display ads on Web pages retreated 1.1% to around $3.8 billion. Although distress and doubt has entered into the online advertising arena, specialists are confident those revenues, as well as spending, will return to form as the U.S. economy recovers.

The Internet was not the only advertising instrument that has been affected by the economy. In fact, newspaper ads have plunged nearly 30% during the 2nd quarter alone. Furthermore, both television and radio broadcasters have seen a steep decline in lost ad revenues, although not as severe as newspapers, but still a double-digit decline.

Recently, consumer advocates and online marketers are preparing to make a stand against online regarding advertisement governing standards that may be instituted to protect individuals. Marketers tailor their ads to follow particular browsing habits, which are most often tracked and data is collected most times without prior notice or permission from the individual browsing the Internet.

During the next several weeks, the U.S. Congress is set to place their hand within the matter by submitting a bill to the House of Representative that would obligate each and every Website to explain irrevocably exactly how they intend on using the information gathered, while allowing the individual using the site to opt out of providing any personal information.

These ads thus become the topic of discussion. Are these tailored ads some sort of surveillance or a form of customer service? Every time a person on the Internet clicks on a Web page, “cookies” are created. These bits of code embedded in the page are then analyzed by marketers that interpret them and determine how to target their ads.

In an estimate from eMarketer Inc., a company established solely for market research and trend analysis on Internet, e-business, online marketing, media and emerging technologies, targeted ads account for $1.1 billion, or 4.5%, of the combined $24.5 billion projected to be spent on online advertising in 2009. In 2007, the figure for targeted ads within online advertising stood at only $500 million.

On October 5, the Federal Trade Commission (FTC) ruled that consumers writing their own personal reviews of online products or services, must disclose in a “clear and conspicuous” manner any compensation they may have received for writing these reviews. They need to state the specific method of imbursement, whether it be monetarily, with gifts or other provided services.

Effective December 1, 2009, the FTC ruling will reprimand any violators with upwards of $11,000 in fines for each infraction and could potential affect celebrity endorsements of products that were made under false pretences.

Dan Olds, an analyst with the Gabriel Consulting Group, commented on the FTC’s rule, “This new policy could have big impact on the bloggers and review sites that post glowing reviews without disclosing that they have been paid to have that opinion or have received free products in exchange for their praise. … I think that forcing them to disclose in their reviews the compensation they received for that review is important and will provide greater consumer protection.”