IAB: Search Sends Online Ad Spend Soaring

  |  September 20, 2004   |  Comments

Total online revenues jumped roughly 40 percent for both the second quarter of 2004 and the first half of the year.

The online advertising picture continues to brighten, with search as the dominant force. The Internet Advertising Report, covering Q2 and the first half of 2004 from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC), found overall revenue spikes, plus increases across a number of ad formats and industry categories.

The second quarter of 2004 rang up roughly $2.37 billion in Internet advertising revenue, representing a 42.7 percent increase over Q2 2003. Additionally, the first half of 2004 found online ad revenue up a staggering 39.7 percent over the same period last year, to $4.6 billion.

Search accounted for 40 percent of the Q2 figures, coming in at $947 million. That's considerably less than the $481 million the format earned during the same period in 2003.

Display ads, classifieds, sponsorships, and rich media also performed admirably, capturing higher revenues in Q2 2004 than in 2003, but slightly less of the total revenue landscape.

Display ads accounted for 20 percent of total revenues in Q2 2004, compared to 23 percent in 2003; classifieds' percentage of total quarterly revenue stayed flat at 17 percent; sponsorships declined from 12 percent in Q2 2003 to 9 percent in 2004; and rich media dropped one percentage point to 8 percent.

E-mail advertising was a disappointment, generating $47 million in revenue in the second quarter of 2004, compared to $66 million the year prior. E-mail's contribution to total online advertising revenue was halved to 2 percent.

Advertising in the consumer sector exhibited quarterly growth, representing 49 percent of total spend versus 35 percent in 2003. Financial services also exhibited a gain, swelling from 13 percent of total spending in 2003 to 17 percent in the second quarter of 2004. The computing and media sectors each dropped 2 percentage points, while pharmaceuticals and healthcare flattened.

The final portion of the IAB/PwC report revealed that CPM and impression pricing represented 44 percent of the Q2 '04 advertising mix, down from 45 percent the year prior. Performance deals increased 4 points to 39 percent, while hybrid deals dropped 3 points to 17 percent.

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