Web Ad Revenue Keeps Growing

Internet advertising revenue continues its climb up the ladder of traditional media outlets with $1.92 billion in revenue, surpassing the estimated $1.58 billion in revenue garnered by outdoor advertising, according to a report by PricewaterhouseCoopers and the Internet Advertising Bureau (IAB).

In 1998, online advertising revenue grew by 112 percent over the $906.5 million. Revenue for the fourth quarter of 1998 increased $165 million (34 percent) over the same quarter for 1997, to $655.6 million, the twelfth consecutive record-setting quarter for the industry.

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“It is easy for us to forget that the Internet as a viable advertising medium is barely four years old, and it is astounding that in such a relatively short period of time its growth is now measured in millions of dollars,” said Rich LeFurgy, chairman of the IAB. “It is significant to note that Internet advertising has not reached a plateau, and we expect that with online ad budgets increasing for current advertisers, and the growing number of large traditional advertisers who are migrating their advertising to the Internet, we look forward to a sustained period of growth in the years ahead.”

The report found that the overwhelming number of revenue transactions (93 percent) continue to be cash-based with barter/trade accounting for 6 percent and packaged deals accounting for 6 percent. Banner advertisements remain the predominate type of advertising, accounting for 56 percent of all advertising on the Net, according to the report. Sponsorships (30 percent), interstitials (5 percent), email (1 percent) and other (8 percent) rounding out the category. Reflecting the continuing growth of e-commerce, hybrid deals accounted for 54 percent of revenue transactions, with CPMs or impression-based deals at 40 percent and performance-based deals at 6 percent of revenues.

“Strong revenue growth led by consumer advertisers, and coupled with seasonality similar to traditional advertising, suggests the Internet is increasingly being factored into advertising budgets, and that the fundamentals are in place for continued industry growth,” said Tom Hyland, Partner and New Media Group Chair, PricewaterhouseCoopers.

Pete Petrusky, PricewaterhouseCoopers’ New Media Group Director agrees.

“The Internet is the only distribution medium which collapses the sales cycle from brand building to closing the sale, a fact increasingly recognized by the marketplace, and underscored by the growth in hybrid pricing schemes,” Petrusky said.

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