NEW YORK — Revenue for the online ad industry dropped by 4.1 percent during the second quarter, its seventh-straight quarter in decline, according to the Interactive Advertising Bureau and PricewaterhouseCoopers.
The New York-based IAB, which sponsored the research, said the Web ad industry took in $1.46 billion during the second quarter. That’s a 22 percent decrease from the second quarter of 2001, when revenues totaled $1.87 billion.
The trade association also revised its earlier, estimated first-quarter figures, down to $1.52 billion. Combined revenue for the first six months of the year now total $2.98 billion, down a staggering 20.8 percent from the first half of 2001. (In August, PWC began calculating estimated figures for first and third quarters, and comprehensive, survey-based figures for second and fourth quarters.)
“The results for the first half of this year come as no surprise to the industry and continue to reflect the weakened media market which all ad sectors have experienced for the first half of 2002,” said IAB President and Chief Executive Greg Stuart.
Since last year, PWC also found that banner ads, sponsorships and classifieds all accounted for decreasing percentages of online ad campaigns. Of the major ad formats, keyword-based search terms alone saw significant growth, increasing from 3 percent to 9 percent of ad spending.
Meanwhile, more niche ad formats grew from 9 percent to 12 percent of overall revenues. While it’s made efforts in the past to encourage the use of newer, larger, more eye-catching and rich-media-friendly ad units, the IAB described the rise in niche formats as an example of “format clutter,” which, some charge, hurts the industry by making it confusing and complex for media buyers.
Some vendors, such as Unicast and Eyeblaster, have taken it on themselves to restrict advertisers to a limited number of formats for ads that use their rich media technology.
Stuart said the association is planning ways to encourage online publishers to reduce the number of ad formats they offer to advertisers, and to adhere to a set of standard units recognized by the IAB.
“You’ve got to comply with the standards … and simplify ad products and sizes,” Stuart said during the trade association’s annual meeting in New York. “I know it’s hard, I know it’s painful.”
During the second quarter, PWC also found that consumer-targeted ads continue to represent the most lucrative segment for online advertising, with about one-third of all creative again being targeted toward consumers. Of that category, retail-specific ads comprised the lion’s share — about 44 percent.
According to the study, computing and financial services ads accounted for about 19 percent and 14 percent of ad spending, respectively, up 1 percent each from a year ago. Ads purchased by media represented 12 percent of all online ad revenue, an increase of 2 percent. Telecom ads accounted for 7 percent of all spending, down from 8 percent last year — not surprising, considering the turmoil in that industry.
The largest online publishers and networks continued to account for the majority of sales, with the top ten media outlets accounting for 76 percent of all revenues, a figure unchanged from a year ago. The top 50 ad sellers brought in 97 percent of the industry’s revenue, up 1 percent from a year earlier.
Cost-per-thousand impressions (CPM) continues as the predominant model for pricing online inventory, PWC found. About 46 percent of all deal revenues during this quarter came from CPM inventory; hybrid agreements accounted for 39 percent; and pay-for-performance ads constituted 15 percent of all media spending. Additionally, barter agreements represented about 10 percent of all deals.
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