Internet ad revenues reach $5.8 billion in US, up 26% over 2004

MUMBAI: Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) released Internet Advertising Revenues covering Q2 and the first six months of 2005 during the the MIXX Conference and Expo. The internet advertising revenues (US) for the first six months of 2005 were approximately $5.8 billion, a new record and a 26 per cent increase over the first half of 2004.

Internet advertising revenue totaled $2.985 billion, just shy of $3 billion for the second quarter of 2005, representing a 26 per cent increase over same period 2004. Q2 2005 revenues represent a 6.6 per cent increase over Q1 2005


"It is clear from this continued growth, that most agencies and marketers are now committed to Interactive as a critical medium in reaching their audiences, as well as engaging them in more immersive brand experiences. At the end of the day, it is about increased effectiveness from your marketing dollars and Interactive delivers this," said IAB president and CEO Greg Stuart.



"The consistent growth in overall revenues shows marketers may be shifting more of their total advertising budgets to online. This is a natural development as research shows more consumers are spending a larger percentage of their media time online, while the flow of advertising dollars follows," said PricewaterhouseCoopers partner David Silverman.



This year's report includes a redefined Referral category that specifically includes Lead Generation, the more common industry language for this category of activity. The Referral/Lead Generation category is six per cent of total spending.

"Recent results show marketers recognize the Internet as an effective response and branding vehicle, as evidenced by the continued strength in Search and Rich Media. Search increased 27 per cent while Rich Media increased 26 per cent," adds PricewaterhouseCoopers director, advisory services Peter Petrusky.

The following highlights key revenue data breakouts; dollar figures are rounded ($ millions):

Ad Formats - Internet ad revenues broken down by ad formats are:


FH 2005

FH 2004


40% ($2,315)

40% ($1,817)

Display Ads    

20% ($1,157)

20% ($942)


18% (1,041)

17% ($782)

Rich Media    

8% ($463)

8% ($368)

Referrals/Lead Generation*    

6% ($347)

2% ($114)


5% ($317)

9% ($414)


2% ($116)

2% ($70)

Slotting Fees    

1% ($58)

2% ($92)

*Renamed category in 2005 specifically including Lead Generation activity; 2004 referred to simply as "Referrals"

Industry Concentration - Concentration of revenues by the top 10, top 25 and top 50 has remained consistent.


FH 2005

FH 2004

Top 10    

74% ($3,401)

74% ($3,401)

Top 25    

87% ($5,035)

89% ($4,096)

Top 50    

96% ($5,555)

97% ($4,459)

Pricing Models - CPM pricing continues to be the predominant choice for buyers and sellers, at a slight cost to Performance Deals and Hybrid.


FH 2005

FH 2004

CPM or Impression    

48% ($2,750)

45% ($2,068)

Performance Deals    

40% ($2,315)

38% ($1,749)


12% ($722)

17% ($782)

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 survey includes data concerning online advertising revenues from websites, 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.

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