ADVERTISING
US Internet ad sales break USD2bn mark
04-10-2000
by Paula Mythen
The US Internet advertising industry broke the USD2 billion mark in the second quarter of this year, amassing USD2.1 billion in revenue in its 18th consecutive quarter of growth.
A further indication of the rapid growth of on-line advertising is the fact that the first half total spend of USD4.1 billion was within a whisker of 1999's full year total of USD4.6 billion.
Revenues for the second quarter grew by 8.8 percent, or USD171 million, over the first quarter of 2000, according to an independent report by PricewaterhouseCoopers on behalf of the Internet Advertising Bureau (IAB). Revenues were up 127.3 percent or USD1.2 billion on the second quarter of 1999.
"While the on-line advertising industry may be taking a breather from its explosive growth over the past several years, a USD2 billion quarter signals the continued health of the Internet as it evolves into history's most robust medium for advertisers and marketers," said Rich LeFurgy, IAB chairman and general partner in WaldenVC. "Far from being broken, the industry is seeing very sizable increases in on-line advertising from large traditional advertisers."
Banner advertisements continue to dominate Internet advertising, accounting for 50 percent in the second quarter. Sponsorships accounted for 27 percent, classified ads seven percent, referrals four percent, interstitials three percent, e-mail two percent, rich media two percent and keyword searches one percent.
Pricing models for Internet advertising showed minimal change in the second quarter with hybrid deals accounting for 46 percent, CPMs or impression-based deals 44 percent and performance-based deals 10 percent. Significantly, 95 percent of revenue transactions were cash-based with barter/trade and packaged deals accounting for just 5 percent of total revenues.
"In the long term, the robust nature of the Internet will continue to lead the world economy, but there will be some bumps in the road, as we have seen in virtually every advertising medium as it grows in importance," noted Tom Hyland, chairman of the PricewaterhouseCoopers New Media Group.
"A significant finding of this report is that on-line advertising continued to increase in the midst of a turbulent phase of the medium's growth, and that advertising became more concentrated in the higher profile sites and portals, signaling that the smart money is going where the traffic is. The first half of 2000 has accounted for almost the full year 1999 revenues."
The categories which dominated on-line spending during the second quarter were consumer-related (30 percent), computing (17 percent), financial services (15 percent), business services (10 percent), and media (nine percent).
The report is based on data from more than 200 companies representing thousands of sites. The IAB is the leading on-line advertising association and member countries include Canada, Belgium, France, Germany, Holland, Hong Kong, Italy, Switzerland and the UK.
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