IAB/PwC Release First Half 2005 Internet Ad Revenue Figures; Q2 Reports Close to $3 Billion in Internet Advertising Revenues; First Half '05 Reaches $5.8 Billion - 26% Increase over '04

Business Wire, Sept 26, 2005

NEW YORK -- Today, during the MIXX Conference and Expo, the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) released Internet Advertising Revenues covering Q2 and the first six months of 2005. Internet advertising revenues (U.S.) for the first six months of 2005 were approximately $5.8 billion, a new record and a 26% increase over the first half of 2004. Internet advertising revenue totaled $2.985 billion, just shy of $3 billion for the second quarter of 2005, representing a 26% increase over same period 2004. Q2 2005 revenues represent a 6.6% increase over Q1 2005.

"It is clear from this continued growth, that most agencies and marketers are now committed to Interactive as a critical medium in reaching their audiences, as well as engaging them in more immersive brand experiences," said Greg Stuart, president and CEO of the IAB. "At the end of the day, it is about increased effectiveness from your marketing dollars and Interactive delivers this."

"The consistent growth in overall revenues shows marketers may be shifting more of their total advertising budgets to online. This is a natural development as research shows more consumers are spending a larger percentage of their media time online, while the flow of advertising dollars follows," said David Silverman, Partner, PricewaterhouseCoopers.

This year's report includes a redefined Referral category that specifically includes Lead Generation, the more common industry language for this category of activity. The Referral/Lead Generation category is 6% of total spending.

"Recent results show marketers recognize the Internet as an effective response and branding vehicle, as evidenced by the continued strength in Search and Rich Media. Search increased 27% while Rich Media increased 26%," adds Peter Petrusky, Director, Advisory Services, PricewaterhouseCoopers.

The following highlights key revenue data breakouts; dollar figures are rounded ($ millions):

Ad Formats - Internet ad revenues broken down by ad formats are:


                              FH 2005           FH 2004
Search                        40% ($2,315)      40% ($1,817)
Display Ads                   20% ($1,157)      20% ($942)
Classifieds                   18% (1,041)       17% ($782)
Rich Media                    8% ($463)         8% ($368)
Referrals/Lead Generation*    6% ($347)         2% ($114)
Sponsorships                  5% ($317)         9% ($414)
E-mail                        2% ($116)         2% ($70)
Slotting Fees                 1% ($58)          2% ($92)



*Renamed category in 2005 specifically including Lead Generation
activity; 2004 referred to simply as "Referrals"

Industry Concentration - Concentration of revenues by the top 10,
top 25 and top 50 has remained consistent.


                              FH 2005           FH 2004
Top 10                        72% ($4,167)      74% ($3,401)
Top 25                        87% ($5,035)      89% ($4,096)
Top 50                        96% ($5,555)      97% ($4,459)


Pricing Models - CPM pricing continues to be the predominant choice
for buyers and sellers, at a slight cost to Performance Deals and
Hybrid.

                              FH 2005           FH 2004
CPM or Impression             48% ($2,750)      45% ($2,068)
Performance Deals             40% ($2,315)      38% ($1,749)
Hybrid                        12% ($722)        17% ($782)

Conducted by the New Media Group of PricewaterhouseCoopers the "Advertising Revenue Report" was started by the IAB in 1996, and represents data from all companies that report meaningful online advertising revenues. The results are considered the most accurate measurement of interactive advertising revenues because the data is compiled directly from information supplied by companies selling advertising on the Internet. The survey includes data concerning online advertising revenues from Web sites, commercial online services, free e-mail providers, and all other companies selling online advertising. First and third quarter revenue reports are estimates, with the actual figures being released along with second and fourth quarter data respectively.

A copy of the full report will be available for download on the IAB website (www.iab.net) the first week of October. The IAB sponsors the Internet Advertising Revenue Report, which is conducted independently by the New Media Group of PwC. The full report is issued twice yearly for full and half-year data, and top-line quarterly figures are issued for the first and third quarters.

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