• by Wendy Davis  @wendyndavis, April 17, 2006

Online ad spending in the first three months increased by 9.3 percent from the last quarter of 2005, according to a new study conducted by Deutsche Bank in conjunction with MediaPost. Pricing also increased, with the cost of premium inventory rising 3.8 percent, run of network inventory edging up 2.7 percent and paid search increasing 3.1 percent quarter-over-quarter.

For the report, 39 media executives were questioned earlier this month about their clients' experiences with Internet advertising in the first quarter, and expectations for this quarter. Collectively, respondents spent $148.5 million on Internet advertising last quarter. This survey, which was conducted online by InsightExpress using members of the MediaPost advisory panel, is the sixth in an ongoing series of quarterly studies of media professionals by MediaPost and Deutsche Bank.

About 72 percent of media executives responding to the current survey reported that their clients spent more on Internet advertising last quarter than in the fourth, with 41 percent seeing increases of more than 10 percent. About 18 percent reported no change in spending, while 6 percent said spending declined.

When asked about pricing, the majority--55 percent--of respondents said the cost-per-thousand impressions for premium inventory was more last quarter than in the last three months of 2005;15 percent of respondents reported increases of greater than 10 percent. Fifty percent of respondents also said pricing for run-of-network inventory had increased, with about 9 percent reporting increases of more than 10 percent.

The cost of purchasing search keywords also increased last quarter, according to the survey. Fifty-three percent of respondents reported paying more for clicks, with 15 percent reporting spikes of more than 10 percent. Where did media buyers place ads? The large portals--AOL, MSN, and Yahoo!--garnered around 22 percent of budget--down from 30 percent in the fourth quarter, while niche sites like iVillage, Marketwatch, and CNET captured 23 percent--also down from the fourth quarter, when such sites accounted for 33 percent of ad spending. Ad networks like Advertising.com and ValueClick drew 10 percent of display spending. Google dominated the paid search market, garnering 44 percent of cost-per-click spending; Yahoo accounted for 20 percent, and MSN took in 5 percent.