Online Ad Revenue Is Breaking Records

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Someone's making Googles of money in the ad business this year. Online ad revenues in the first half of 2011 more than doubled versus the period in 2010, according to the Interactive Advertising Bureau (IAB). The firm, whose report on first-half ad revenue was prepared with Pricewaterhouse Coopers (PwC), said revenue from online marketing efforts rose 23.2% to a record $14.9 billion in the first half.

Of that chunk of change, search grabbed 49%, or about $7.3 billion, per IAB. The firm says that increase represents more than twice its previous year's growth rate of 11.6%.

The organization said that, overall, online ad revenues for the second quarter alone reached record numbers, increasing 24.1% to $7.7 billion, versus $6.2 billion for the same period last year. That 2010 number represented a 13.9% increase versus 2009.

Greater than a third -- 37% -- of the $14.9 billion first-half 2011 ad revenue comes from display-related advertising, such as banners, rich media, video and sponsorships, per the IAB and PwC. Display, which accounts for about $5.5 billion in revenue in the first half this year increased 27.1% over the same period in 2010. Last year, display ads grew 16% versus the year before.

In other online ad formats, dollars spent on lead generation increased 25.4% over the same period in 2010, but classified ad dollars were down 2% and email spend decreased 34.2%, per the IAB and PwC.

The organizations said the numbers also indicate that marketers are increasingly using performance-based ROI models for ads versus impression-based models. Spend on the former increased to $9.6 billion, per the report. Meanwhile, while Impression-based ad spend also grew (by 10.8%) it is now just 31% of total interactive ad buy, which represents a 35% drop year-over-year.

"Strong online advertising growth has continued into the first half of 2011," said David Silverman, a partner at PricewaterhouseCoopers LLP. "Fueling this growth is the ability of advertisers to correlate performance and results with the dollars they are investing."

Internet ad spend for the first half of the year has increased nearly every year since the IAB started charting spend in 1996. Three exceptions are 2001, 2002, and the first half of 2009, when spend dropped 5%. The largest increase in spend as a percentage versus the prior period was in the first half of 1997, when spend increased 320% versus the first half of 1996. But that amounted to a mere $344 million, which is between 2% and 3% of what advertisers spent in the first half this year.

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