Online Ad Revenues Up 33 Percent In 2004

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Online ad revenues for 2004 were up 33 percent to $9.6 billion, the highest level ever, according to the latest report from the Interactive Advertising Bureau and PricewaterhouseCoopers.

New data include finalized revenue numbers from Q3, Q4 and full-year 2004 as reported by interactive advertising sellers. Of the total figure, $2.3 billion was spent in the third quarter; and $2.7 billion in the fourth.

The latter number makes Q4 2004 the most lucrative quarter ever reported for the medium, according to historical IAB/PwC results. That's perhaps not surprising, as the quarter included both the final four weeks of the Presidential campaign and the holiday season. It was the second consecutive year in which Q4 revenues were up year-over-year.

Search marketers continued their stampede. Annual revenue in this category leapt from 35 to 40 percent of the overall spend. On a dollar basis, search revenues were up more than half to $3.9 billion. Classifieds rose one percent to 18 percent. Display and sponsorship ad revenue climbed 14 percent to $2.6 billion, but the share of the total declined from 31 to 27 percent. Within the display category, rich media spending was up 32 percent to $963 million.

"The big news is that display advertising is really growing now," said IAB President and CEO Greg Stuart. "Brand marketers are saying, 'Hey, if it works for direct, then absolutely it's a medium that works for the rest of us.'"

Consumer advertisers dominated online marketing, capturing 49 percent of all 2004 revenues. Within that group, retail (40 percent) and automotive (19 percent) dominated. Consumer advertising's share of the total online spend was up 12 percent over the previous year. The most competitive non-consumer verticals, meanwhile, were "computing advertisers" (18 percent) and financial services (17 percent). Telecommunications lagged behind at four percent.

Within the classified format, which remained surprisingly strong given the challenges posed by free listings sites, dominant segments were job listings (47 percent) and auction-based listings (34 percent).

If you require proof local search is still a blip on the horizon, the IAB/PwC report has it. Online national advertising targeting non-local audiences accounted for 94 percent of all revenues reported.