Report: Internet Ad Spending Hits New Heights

Internet ad spend topped $2.4 billion last quarter, according to the quarterly “Internet Ad Revenue Report” conducted by PricewaterhouseCoopers (PwC) on behalf of the Interactive Advertising Bureau (IAB).

The third quarter estimates mark the eighth consecutive quarterly increase for the industry and the fourth record-setting quarter. Q3 2004 represents a 35.3 percent increase over the $1.79 billion of the year-ago quarter, and a 2.4 percent increase over the $2.37 billion of the previous quarter.

“Historically, the second and fourth quarters are the strongest in advertising,” said Greg Stuart, the IAB’s president and CEO. “That the industry bested Q2 revenues is testament to the confidence and success marketers have found in the medium. As the experts predict, the holiday season should be a merry one for the industry.”

Revenue for the first nine months of 2004 totaled slightly over $7.0 billion, compared with the $7.3 billion in revenue reported for all 2003. Based on these numbers, 2004 could be a record year, beating the previous $8.0 billion revenue record reported in 2000, according to Pete Petrusky, director of advisory services at PwC.

The third-quarter figures are an estimate, based on aggregated data from the top 15 online ad sellers. These results were extrapolated to calculate the total estimated industry revenue figure. Actual Q3 results will be appear in PwC’s full report, expected in Spring 2005.

“Single digit, sequential growth demonstrates the industry has left behind the large revenue spikes that characterized the early years. We’re now looking at a maturing, stable industry that inspires further investment by large, traditional marketers,” said Tom Hyland, partner and chair of PwC’s new media group.

The IAB launched the “Advertising Revenue Report” in 1996, the same year the body was formed. It incorporates data from all companies reporting “meaningful” online ad revenues. Types of companies surveyed include Web sites, commercial online services, email providers, and others selling online advertising.

The IAB also announced today a global consortium of industry stakeholders has accepted a set of global measurement standards for online ad impression measurement.

The new guidelines recommend ad-impression counting be conducted from the client- as opposed to server-side, meaning an impression is counted once a browser receives the creative. It also asks for consistent elimination of non-human activity counting, defining what is a person and what’s a spider or robot. The third recommendation is for consistent cache busting.

In addition to ad-impression guidelines, the report recommends third-party independent auditing and certification of ad impressions for all ad-serving applications used in the buying and selling processs, starting in the U.S. Certification is intended to increase marketers’ confidence in consistent implementation of the standard. Wide implementation of the guidelines is expected by late 2005.

“These guidelines demonstrate our continued commitment to being the most accountable ad medium. In just 10 short years, we rocketed forward by offering marketers a whole new experience for measuring ad campaigns,” Stuart said. “This initiative improves on that opportunity by delivering not just a uniform measurement standard, but one that travels across borders.”

The guidelines have the support of almost all major online publishers, as well as approximately 35 out of the 37 major online ad server vendors worldwide, Stuart said. The guidelines are intended to hasten online ad spending growth by simplifying the buying and selling process for advertisers, marketers and publishers.

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