Report: Internet Ad Revenues Top $1 Billion in '98

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For the first time, Internet advertising revenue has exceeded $1 billion within the same calendar year, totaling $1.3 billion through the nine months ended September 1998, according to a report from the Internet Ad Bureau.

Third quarter 1998 Internet advertising revenues climbed to $491 million, an increase of 116 percent over the same quarter for 1997, the 10th consecutive record- setting quarter for the industry, the report said.

The IAB Ad Revenue Report compiles data reported directly from publishers. Based on the first three quarters total of $1.3 billion reported for 1998, coupled with historical seasonal revenue patterns, 1998 is approaching a $2 billion run-rate.

According to the report, which is conducted by the New Media Group of PricewaterhouseCoopers for the IAB, the categories which led online spending during the third quarter were consumer-related (27%), computing (24%), financial services (16%), telecom (11%) and new media (7%).

Banner advertisements continue to be reported as the predominant type of advertising, accounting for 53 percent, with sponsorships (30%), interstitials (6%) and other (11%) rounding out the category. Reflecting the growth of e- commerce, hybrid deals accounted for 52% of revenue transactions. with CPMs or impression-based deals at 43% and performance-based deals at 5% of revenues.

"This report is the biggest endorsement yet from the marketing and advertising communities that online advertising is here to stay as an integral component of their marketing and branding plans," said IAB Chairman Rich LeFurgy. ". . .Even in a traditionally weak third quarter, we have seen a significant bounce in revenue growth. Larger percentage increases on larger numbers attest to the robustness of our medium. The industry continues to break records, quarter after quarter indicating that more and more traditional advertisers are experiencing the effectiveness of online advertising. . .in a word, it works."

The report represents data from more than 200 companies representing over 1,200 Web sites.