Internet Ad Revenues Grew in Q3 - Again

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Third-quarter Internet advertising revenues were up 22 percent year-over-year, according to a report from IAB and PricewaterhouseCoopers released today. U.S. revenues hit a record $7.9 billion for the third quarter of 2011.

The report showed a 2.7 percent uptick from Q2 revenue - which was the previous record-setter. In fact, Internet advertising revenue has grown for eight consecutive quarters, according to the IAB Internet Advertising Revenue Report, which is conducted independently by the New Media Group of PwC.PwC compiles the data from companies selling advertising, including web publishers, commercial online services and free email providers. The report found that revenue is concentrated among the 10 leading ad-selling companies, which accounted for 72 percent of total revenues in Q2 2011. Companies ranked 11th to 25th accounted for just 10 percent.

Search revenues accounted for 49 percent of total revenue this quarter, up 47 percent year-over year. Display-related advertising accounted for $2.8 billion, or 37 percent of total revenues, up slightly from 36 percent in 2010. Quarterly email revenue of $41 million was down 33 percent from last year's total of $61 million.

Both online classifieds and lead-generation advertising continued their slow decline begun in 2006, the report found. Retail dominated total spending in the first half of this year, accounting for 33 percent of the total. Telecom was the next largest sector, at 14 percent.

The IAB, founded in 1996, began tracking Internet ad revenue in 1999. Second-quarter revenue shrank in 2002 and 2003, but since then, they have steadily climbed, except for a plateau in 2009.

The 2011 first six months’ revenues of $14.9 billion are on an annual run-rate to make this the highest annual year, exceeding the $26 billion spent in 2010, which was the previous highest annual total.

While these are great numbers, it's interesting to see just how far off they are from earlier forecasts. In 2007, Piper Jaffray predicted online ad spending would surpass $80 billion this year.