Interactive ad revenues soar 33 percent

Westchester County Business Journal, Jun 27, 2005

Search, classifieds, display and rich media continue to grow at a healthy rate, according to the Interactive Advertising Bureau and PricewaterhouseCoopers' recently released Internet Advertising Revenue Report covering the final numbers for 2004.

Overall industry revenues rose nearly 33 percent from 2003, totaling more than $9.6 billion, and exceeded the previous revenue record in 2000 by nearly 20 percent. Fourthquarter 2004 revenues totaled $2.69 billion, marking the highest quarter ever reported.

"Interactive advertising has clearly become a mainstream medium and one that can no longer be ignored as a critical piece of any marketing mix," said Greg Stuart, president and chief executive officer of the Interactive Advertising Bureau.

He said the 2004 reported figures "indicate that interactive is firing on all cylinders, including display, search and classifieds and is squarely on track to surpass consumer magazine revenues."

Consumer advertisers continue to represent the largest category of advertisers, accounting for 49 percent of the 2004 annual revenues, up from 37 percent reported for the same period in 2003.

The largest subcategories under the consumer umbrella include retail, automotive, leisure, entertainment and packaged goods. As a percent of 2004 total revenues, computing and financial services account for 18 percent and 17 percent, respectively, with telecommunications and pharmaceutical and health care rounding out the total at 4 percent and 6 percent, respectively.

"The increased adoption of broadband will continue to evolve the face of interactive advertising as more compelling media ads and video formats are created," notes Tom Hyland, partner, PricewaterhouseCoopers. "More and more, brand marketers will look to interactive as an integral platform to deliver rich experiences for brand building and enhancement."

"The revenue results reported for 2004 confirm a very healthy environment for online advertising, for both direct marketers seeking immediate performance results, as well as brand advertisers looking to create or enhance an image, product or service," said Pete Petrusky, director of advisory services at PricewaterhouseCoopers. "Moreover, the Internet is the only medium to adopt a global standard for impression measurement, intended to simplify the buying and selling process for online advertising."

Conducted by the new media group of PricewaterhouseCoopers, the study was started by the Interactive Advertising Bureau in 1996. It represents data from all companies that report meaningful online advertising revenues. The survey includes data about online advertising revenues from Web sites, online services, e-mail providers and others selling online advertising.

Meanwhile, the Interactive Advertising Bureau and PricewaterhouseCoopers reported that Internet advertising totaled more than $2.8 billion for the first quarter of 2005, making this the highest reported quarter in nine consecutive growth quarters.

First-quarter 2005 revenues represent a 26 percent increase from the same period last year and a 4.3 percent increase from the fourth-quarter of 2004.

"Marketers continue to recognize the relevance of interactive as an integral part of their marketing mix," said Stuart. "The continued and steady growth we have experienced over the past two years is a clear indication that this medium delivers results and is fast becoming accepted as part of the mainstream."

"While the online audience gets bigger and broader, the TV audience continues to fragment, even as the cost of advertising spots rises," notes Tom Hyland, partner and new media group chairman at PricewaterhouseCoopers. "Add the growth of broadband in the home, which enables advertisers a platform to deliver rich media, and brand advertisers have a new mass audience to target. The economics are too compelling for marketers to ignore."