US net ad revenue grows by 33 per cent

MUMBAI: The Interactive Advertising Bureau (IAB) in the US and PricewaterhouseCoopers (PwC) have released the Internet Advertising Revenue Report.

The report notes that Internet advertising in the US surged by 33 per cent in 2004 to a record $9.6 billion, surpassing levels seen during the early Web boom, and will grow at a similar rate in 2005,



The $9.6 billion figure exceeded the previous revenue record in 2000 by nearly 20 per cent. Q4 2004 revenues totaled a record $2.69 billion, marking the highest quarter ever reported.

IAB president and CEO Greg Stuart said, "Interactive Advertising has clearly become a mainstream medium and one that can no longer be ignored as a critical piece of any marketing mix. “The PwC 2004 reported figures indicate that Interactive is firing on all cylinders including display, search and classifieds and is squarely on track to surpass consumer magazine revenues.”

Consumer advertisers continue to represent the largest category of advertisers accounting for 49 per cent of the 2004 annual revenues, up significantly from the 37 per cent reported for the same period in 2003. The largest sub-categories under the consumer umbrella include retail, automotive, leisure, entertainment and packaged goods. As a per cent of 2004 total revenues, computing and financial services account for 18 per cent and 17 per cent respectively, with Telecommunications and pharmaceutical and healthcare rounding out the total at four per cent and six per cent respectively.



PricewaterhouseCoopers partner Tom Hyland notes, “The increased adoption of broadband will continue to evolve the face of interactive advertising as more compelling media ads and video formats are created. More and more, brand marketers will look to interactive as an integral platform to deliver rich experiences for brand building and enhancement.”

PricewaterhouseCoopers director, advisory services Pete Petrusky says, “The revenue results reported for 2004 confirm a very healthy environment for online advertising, for both direct marketers seeking immediate performance results, as well as brand advertisers looking to create or enhance an image, product or service. Moreover, the Internet is the only medium to adopt a global standard for impression measurement, intended to simplify the buying and selling process for online advertising.”



Ad Formats - Internet ad revenues broken down by ad formats for the 2004 full year revenue. Revenue figures are in millions. Market share is a percentage figure.

Type of Advertising    2004 Revenue    Market Share    2003 Revenue    Market Share

Display Advertising    1,829    19    1,526    21

Sponsorship    770    8    727    10

Slotting Fees    193    2    218    3

Rich Media    963    10    727    10

All Display    3,754    39    3197    44

Search    3,850    40    2,543    35

Classifieds    1,733    18    1235    17

E-mail    96    1    218    3

Referrals    193    2    73    1

Conducted by the New Media Group of PricewaterhouseCoopers the Advertising Revenue Report was started by the IAB in 1996, and represents data from all companies that report meaningful online advertising revenues. The results are the most accurate measurement of interactive advertising revenues because the data is compiled directly from information supplied by companies selling advertising on the Internet.

The survey includes data concerning online advertising revenues from Web sites, commercial online services, free e-mail providers, and all other companies selling online advertising. First and third quarter revenue reports are estimates, with the actual figures being released along with second and fourth quarter data respectively.

Founded in 1996 the IAB represents over 200 leading interactive companies that are actively engaged in, and support the sale of interactive advertising. IAB members are responsible for selling over 86 per cent of online advertising in the US. On behalf of its members, the IAB evaluates and recommends standards and practices, fields interactive effectiveness research and educates the advertising industry regarding the use of interactive advertising.

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