IAB: Industry Revenues Topped $2B in Q2

  |  October 3, 2000   |  Comments

The online ad industry's largest association is optimistic about the near future, despite its current woes.

The Internet Advertising Bureau Tuesday released its quarterly report of industry revenues for second quarter, revealing burgeoning growth -- in a sore reminder of the industry's current state.

The Internet Ad Revenue Report, conducted independently by PricewaterhouseCoopers on behalf of the industry's largest association, recorded the industry's eighteenth consecutive quarter of revenue growth, during which it amassed some $2.1 billion.

It also reported that second quarter revenues grew 8.8 percent -- $171 million -- over first quarter, and 127.3 percent -- $1.2 billion -- over the year-ago period. Thus far, the industry has collected about $4.1 billion during the first half of 2000, as compared to $4.9 billion for all of 1999.

While the report highlights the industry's rosy second quarter, statistics for third quarter -- during which online advertising companies visibly began to feel the effects of the April correction -- have not yet been collected.

Nevertheless, the report's authors see the current quarter's financial troubles as decidedly short-term, estimating a run rate between $8 billion and $10 billion.

"While the online advertising industry may be taking a breather from its explosive growth over the past several years, a $2 billion quarter signals the continued health of the Internet," said IAB chairman Rich LeFurgy.

LeFurgy said he anticipates growth ahead, with offline advertisers' initial uncertainty and experimentation giving way to larger-budget online ad spends as they adopt the medium in earnest.

"Far from being broken, the industry is seeing very sizable increases in online advertising from large traditional advertisers," he said.

According to the report, consumer-related products and services led online ad spending, accounting for 30 percent of total revenues. Computing and financial services followed with 17 and 15 percent, respectively, and business services (10 percent) and media (9 percent) rounded out the field.

The report also found that the overwhelming number of revenue transactions -- 95 percent -- continue to be cash-based, with barter/trade and packaged deals accounting for the balance.

Banner advertisements continue to be reported as the predominate type of advertising, accounting for half of all buys for Q2. Sponsorships made up 27 percent; classified ads, 7 percent; referrals 5 percent; interstitials, 3 percent, email, 2 percent; rich media, 2 percent; and keyword searches, 1 percent.

Pricing models for Internet advertising remained fairly constant in the second quarter, with CPM or impression-based deals accounting for 44 percent, and performance-based deals making up 10 percent. Hybrid deals accounting for 46 percent.

"A significant finding of this report is that online advertising continued to increase in the midst of a turbulent phase of the medium's growth, and that advertising became more concentrated in the higher profile sites and portals, signaling that the smart money is going where the traffic is," said Tom Hyland, chair of PWC's New Media Group, which conducted the study.

"The historical fourth quarter bump in ad revenue, combined with the 'use it or lose it' budgets, we look for 2000 to be a very good year for the industry," Hyland added.

ClickZ Live Toronto Twitter Canada MD Kirstine Stewart to Keynote Toronto
ClickZ Live Toronto (May 14-16) is a new event addressing the rapidly changing landscape that digital marketers face. The agenda focuses on customer engagement and attaining maximum ROI through online marketing efforts across paid, owned & earned media. Register now and save!


COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.



Featured White Papers

ion Interactive Marketing Apps for Landing Pages White Paper

Marketing Apps for Landing Pages White Paper
Marketing apps can elevate a formulaic landing page into a highly interactive user experience. Learn how to turn your static content into exciting marketing apps.

eMarketer: Redefining Mobile-Only Users: Millions Selectively Avoid the Desktop

Redefining 'Mobile-Only' Users: Millions Selectively Avoid the Desktop
A new breed of selective mobile-only consumers has emerged. What are the demos of these users and how and where can marketers reach them?


    • Contact Center Professional
      Contact Center Professional (TCC: The Contact Center) - Hunt ValleyLooking to join a workforce that prides themselves on being routine and keeping...
    • Recruitment and Team Building Ambassador
      Recruitment and Team Building Ambassador (Agora Inc.) - BaltimoreAgora, www.agora-inc.com, continues to expand! In order to meet the needs of our...
    • Design and Publishing Specialist
      Design and Publishing Specialist (Bonner and Partners) - BaltimoreIf you’re a hungry self-starter, creative, organized and have an extreme...