• by Shankar Gupta , September 27, 2005

Internet ad revenues for the first half of this year surged to $5.8 billion--a 26 percent increase from the same period in 2004, according to a report released by the Interactive Advertising Bureau and PricewaterhouseCoopers Monday.

Online ad revenue for this year's second quarter totaled just under $3 billion, also marking a 26 percent increase over the second quarter of last year, as well as an increase of approximately 7 percent over the first three months of the year.

Search and display ads represented the bulk of online ad spending, with search accounting for 40 percent of total spending, and display ads pulling in 20 percent. Search, display ads, classifieds, and rich media ads all posted year-over-year increases, with search jumping about 27 percent to $2.3 billion in the first half of 2005, rich media increasing around 26 percent to $463 million, classifieds jumping approximately 33 percent to just over $1 billion, and display ads increasing by about 23 percent to $1.1 billion.

Referrals and lead generation spending soared to $347 million--about 204 percent higher than in the first half of 2004--but the category still only represents 6 percent of total ad spending.

Two categories posted year-over-year losses--sponsorships and slotting fees, which dropped about 23 percent and 37 percent, respectively, to $317 million and $58 million.