Association ferrets out hard numbers, while TNS and Nielsen rely on panel and rate card estimates.
One of the most watched reports in the online industry has been a benchmark for tracking online ad revenues for the past 13 years. But the interactive ad spending research conducted by PricewaterhouseCoopers on behalf of the Interactive Advertising Bureau bears little resemblance to other online ad revenue reports.
Most significant, while standard-bearers TNS Media Intelligence and Nielsen Online track only online display advertising, the IAB report tracks all sorts of online ad formats, from search and classifieds to pre-roll video and rich media units.
But the landscape has changed drastically in the past decade as online ad spending has soared and the industry has matured. In that time, paid search advertising has grown so rapidly that it has come to dominate online ad sales in terms of market share.
All along, the IAB in conjunction with research partner PwC, has tracked the decline of sponsorships and display formats, and the rise of search. Search was on the radar as early as Q1 2000, when it accounted for 1 percent of online ad revenue, compared to the 52 percent share attributed to banners and the 27 percent share applied to sponsorships. The IAB's most recent report, out yesterday, shows search up to 47 percent of online ad revenues, while all display ads including banner ads and video accounted for 34 percent, and sponsorships amounted to just 2 percent.
Meanwhile, the TNS and Nielsen reports, for the most part, have stuck to measuring display advertising alone. There is a reason for this. Primarily, both companies use their audience measurement data as a key factor for determining online ad spend. Put simply, each firm estimates the number of ad impressions that ran on a given site based on its audience traffic estimates, and combines that with publishers' rate card pricing information to determine how much was spent on display ads on particular sites, or across campaigns or advertiser verticals.
The final numbers can be used as a barometer for measuring online display advertising over time, when compared to each research firm's historical data. In other words, they work well in a vacuum. But online ad spending reports from TNS and Nielsen show great disparity when compared to one another.
For instance, earlier this month, Nielsen reported that display ad spending dropped 1 percent in the first half of this year compared to the first half of 2008. TNS, on the other hand, reported that online display spending rose 6.5 percent in the same period. The IAB's gauge disagreed with both, showing that overall online ad spending on multiple formats fell 5.3 percent in H1 2009.
The IAB report, and others such as reports from Forrester Research, which forecasts online ad revenues, take into account hard numbers. For the IAB report, PwC surveys online publishers and ad networks, and supplements information they provide on Web ad revenue with public data from tax filings.
In its own description of its report's methodology, the IAB states its mission is "to achieve differentiation from existing estimates and accomplish industry-wide acceptance."
"We basically go to companies and ask them what their revenues were in interactive advertising and ask them to break it down for us," explained PWC Partner David Silverman, who has worked on the IAB report for about five years. "We wanted it to be the most all encompassing Internet report."
Of course, revenue data provided by ad sellers with a vested interest in making their businesses appear successful -- even if the information is used in aggregate -- could be considered somewhat unreliable.
As online advertising grows up, the research methodologies employed to measure it deserve ongoing evaluation. Indeed, acknowledged Silverman, the IAB report may also morph to include emerging ad formats such as in-game advertising.
"Right now I don't think there's any significant category that we're missing," he said. "But in the future as new categories develop, we want to make sure that we measure them... The overall interactive category will continue to expand."
Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.
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