A searing summer for web advertising
IAB: Third-quarter ad spending rose 34 percent
November 22, 2005
The explosive growth of internet advertising is bound to slow down at some point, but clearly that point hasn’t been reached yet. If anything, it’s picking up.
The Interactive Advertising Bureau (IAB) and the accounting firm PricewaterhouseCoopers report that internet ad revenue hit a record high of $3.1 billion in the third quarter, up 34 percent from $2.3 billion in the year-earlier quarter and up 5 percent from $2.9 billion in the second quarter. The IAB, a trade association of internet advertisers, bases its estimate for the quarter on data provided by the web’s top advertisers.
The IAB issues quarterly revenue reports, with first and third quarter estimates based on advertising on the top sites and full reports issued for full- and half-year data.
The 34 percent year-on-year jump outstrips the 26 percent gains of the prior two quarters. Consumers continue to flock to the internet for news, information and entertainment, providing a growing audience for advertisers.
Of course, the web’s soaring ad growth comes from a much smaller base compared to traditional media, but it’s still impressive in its pace quarter after quarter, and during a time of uncertainty for those traditional media.
Magazines, for example, eked out a gain of only 0.3 percent in ad pages for the first 10 months of the year, according to Publishers Information Bureau. The broadcast upfront was basically even to last year, and falling circulation at newspapers has many concerned about advertising.
Further, the pace of internet growth appears to be quickening ahead of most forecasts, which had it pegged at up to 25 percent. Internet ad revenue is on pace to top $12 billion for the year, which would far surpass last year’s record of $9.6 billion.
And internet companies such as Google are taking steps to boost internet advertising even further. Google executives said last night that the company will add a feature to its new database service“Google Base“that will let stores provide information about local shopping, such as where certain items are available.
Newspapers are worried that Google Base will pull away their classified ads, and yellow page publishers are concerned as well.
Some media people predict that more targeted forms of advertising will account for the strongest gains on the internet in coming months. In any case, barring recession, it looks like the overall numbers for internet advertising will continue to leap higher.
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