IAB: Internet ad spending continues to climb

Internet ad revenue in the US for the first six months of this year skyrocketed to $7.9 billion US, a record 37% increase over the same period last year. More than half of the spending - $4.1 billion US - was attributed to Q2 alone. The Internet Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) released the report yesterday as part of the MIXX Conference and Expo in New York, which is the official interactive event of Advertising Week 2006.

The report shows that choice of ad formats hasn't changed much over the past year in the US. Search continues to get the bulk of the dollars (40%), with classifieds and referrals/lead generation each showing slight 2% increases. Display-related advertising garnered 31% of the spending, down by 3% from the previous year.

The picture is slightly different than the latest IAB Canada findings (2005) that show spending on display-related ads to be 41% and search advertising at 35% - although the Canadian market seems to be moving in the same direction as the US, since in 2004 display grabbed 45% of total revenues and search just 30%.

These numbers were released in July when IAB Canada announced that final ad revenue for 2005 reached $562 million - a 54% increase over the previous year - with 22% of the total spend targeted to the French Canadian market. At the same time, IAB projected that Internet ad revenue in this country would climb to more than $801 million this year. In the US, CPM pricing continues to be the predominant choice for buyers and sellers, although results-based deals gained 7% over the same period a year ago.

Some highlights from the US Advertising Revenue Report include:
By Staff 
September 26, 2006

Internet ad revenue in the US for the first six months of this year skyrocketed to $7.9 billion US, a record 37% increase over the same period last year. More than half of the spending – $4.1 billion US – was attributed to Q2 alone. The Internet Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) released the report yesterday as part of the MIXX Conference and Expo in New York, which is the official interactive event of Advertising Week 2006.

The report shows that choice of ad formats hasn’t changed much over the past year in the US. Search continues to get the bulk of the dollars (40%), with classifieds and referrals/lead generation each showing slight 2% increases. Display-related advertising garnered 31% of the spending, down by 3% from the previous year.

The picture is slightly different than the latest IAB Canada findings (2005) that show spending on display-related ads to be 41% and search advertising at 35% – although the Canadian market seems to be moving in the same direction as the US, since in 2004 display grabbed 45% of total revenues and search just 30%.

These numbers were released in July when IAB Canada announced that final ad revenue for 2005 reached $562 million – a 54% increase over the previous year – with 22% of the total spend targeted to the French Canadian market. At the same time, IAB projected that Internet ad revenue in this country would climb to more than $801 million this year. In the US, CPM pricing continues to be the predominant choice for buyers and sellers, although results-based deals gained 7% over the same period a year ago.

Some highlights from the US Advertising Revenue Report include:

Ad Formats –
Internet ad revenues broken down by ad formats are $US millions

  FH 2006 FH 2005
Search 40% ($3,164) 40% ($2,315)
Classifieds 20% ($1,582) 18% ($1,042)
Referrals/Lead Generation 8% ($633) 6% ($347)
E-mail 2% ($158) 2% ($116)
Display Related 31% ($2,531) 34% ($1.968)
Rich Media 7% ($554) 8% ($463)
Ad Banners/Display Ads 21% ($1,661) 20% ($1,157)
Sponsorships 4% ($316) 5% ($289)
Slotting Fees <1% (<1$) 1% ($58)

Pricing Models –

  FH 2006 FH 2005
CPM or Impression 48% ($3,796) 48% ($2,778)
Performance Deals 47% ($3,717) 40% ($2,315)
Hybrid 5% ($395) 12% ($694)

The IAB sponsors the twice-yearly US Advertising Revenue Report, but research is conducted independently by the New Media Group of PwC. The report includes online ad revenue data from Web sites, commercial online services, free e-mail providers, and all other companies selling online advertising.