The Internet Ad Year in Review

The increase in Internet advertising revenue in 1998 shows a continued confidence in the medium, according to the Internet Advertising Revenue Report by the Internet Advertising Bureau and PricewaterhouseCoopers.

An increase in consumer advertisers (28 percent of total 1998 revenues) has helped fuel an explosion in revenue, the report found. Internet advertising revenue has grown from $267 million in 1996 to nearly $2 billion in 1998. The fourth quarter of 1998 saw online publishers report aggregate Internet advertising revenue totaling $655.6 million, the first time monthly Internet advertising revenue exceeded $200 million per month per quarter. Fourth quarter 1998 revenue was 95 percent higher than 1997’s fourth quarter numbers and 34 percent higher than 1998 third quarter numbers.

Consumer advertisers have now been the leading industry category spenders for two years. Financial services companies have increased their share of spending on Internet advertising in the same time period, as have telecom companies. Both the computing and new media industries have seen their share of spending on Internet ads decline, according to the report.

Internet advertising spending has now passed outdoor advertising (e.g., billboards) and farm publications in the race for advertising dollars, according to the report. Next up for Internet ads are business papers and cable TV (see table).

The annual growth rate of Internet advertising far surpasses any other media. With a rate of 111.8 percent, the next best percentage of growth is cable television at 13 percent.

Online advertising remains concentrated at the top, with 10 leading publishers accounting for 71 percent of total advertising revenues in the fourth quarter of 1998, up from 67 percent in the fourth quarter of 1997.

Banner advertisements remain the predominate type of advertising, accounting for 56 percent of all advertising on the Net, according to the report. E-mail advertising, which the IAB began tracking in the fourth quarter of 1998, accounted for 1 percent of the revenue during that quarter, while the “other” category accounted for 8 percent.

The Internet Advertising Revenue Report is based on a database of industry participants with online advertising revenue averaging $5,000 or more per month and a mail survey with Web publishers, online service providers, and push and email providers.

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