IAB: Search Boosted 2003 Ad Jump

With keyword search leading the charge, Internet ad revenue rose nearly 21 percent in 2003, totaling almost $7.3 billion, according to figures released Wednesday by PricewaterhouseCoopers (PwC) and the Interactive Advertising Bureau (IAB).

The final $7.3 billion figure was slightly higher than a February estimate of $7.2 billion released by the two groups, which have been tracking these numbers in tandem since 1996. Revenue for the third quarter, $1.8 billion, was higher than had been estimated.

Revenue from keyword search, defined by the IAB as fees advertisers pay online companies to link and/or list their site to a specific search term, shot up. The ad format grew a whopping 20 percent. Rich media ads (those with streaming video and/or audio and interactive components) grew 3 percent. Also, there was a 2 percent rise for classified ads, which involve fees advertisers pay online companies to list specific products or services.

Some ad formats saw declines in 2003. Display ads dropped to 21 percent of the overall pie, down from 29 percent the year before. Sponsorship declined to 10 percent of revenues, down from 18 in 2002. Interstitials also fell, from 5 percent in 2002 to 2 percent last year. E-mail dropped to 3 percent in 2003, having represented 4 percent of overall spend in 2002.

Consumer advertisers led the way in advertising spending, accounting for 37 percent of revenue, up 5 percent from 2002. Computing was the second-highest category, accounting for 20 percent of ad spending, up 2 percent from the previous year. Financial services was the third-highest, at 12 percent, a 1 percent drop from 2002. Media had an 11 percent share and business services 10 percent.

There was a dramatic increase in the use of performance-based, or cost-per-click, pricing models. These pricing models jumped 16 percent, from 21 percent in 2002 to 37 percent in 2003. This increase came at the expense of hybrid deals, which dipped 14 percent, from 34 percent in 2002 to 20 percent in 2003.

Overall, though, CPM pricing (cost per thousand impressions) was still the pricing model of choice, capturing 43 percent of spend, a 2 percent dip from 2002.

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