Online Ad Spending Reaches $4.2B in Q3

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Internet ad spending grew by more than 30 percent year-to-year to reach $4.2 billion in the third quarter, according to the latest Internet Advertising Revenue Report from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC).

The quarter sets a new record, topping the $4.1 billion reported for the second quarter of this year, which brought interactive ad spending to $7.9 billion in the first half of 2006. Revenues in the third quarter of 2005 reached $3.1 billion, and revenues for all of 2005 topped out at $12.5 billion.

"We're close to surpassing the full year revenues from 2005 in the first three quarters of this year, which is very exciting," Sheryl Draizen, SVP and general manager of the IAB, told ClickZ. "Marketers are becoming more confident in the medium. They're spending more, seeing better results, and then returning to spend even more."

The report does not break out spending categories in the first or third quarters of a year, but in its mid-year report there was continued acceleration of growth in search, classifieds and display advertising. In the first half, search took in 40 percent of online revenues, display held 31 percent, and classifieds had 20 percent. Referrals and lead generation comprised 7 percent of the total, and e-mail held 2 percent in the first half.

Breakouts for the third quarter are not expected to be drastically different from those in the first half, Draizen said, but the details will not be known until the full-year report is compiled in early 2007. One trend in the first half that is likely continuing is marketers' use of multi-channel approaches, both across media and within interactive itself, she said.

For example, an increasing number of marketers are spending more on both search and display ads, creating a synergy that exceeds the results of either medium alone, she said.

"Marketers are seeing the power of search and display together. The impact of the combination is greater than both of them by themselves," she said.

The IAB and PwC have been conducting the report together since 1996. It is compiled by PwC's New Media Group from data shared by all companies that report meaningful online advertising revenues, including Web sites, ad networks and ad-supported e-mail providers.