Consumer Marketers Boosted Online Ads In '06, IAB Says

Branded display ads and search placements helped the online ad industry post its best year ever in 2006, according to numbers released yesterday by the Internet Advertising Bureau and PricewaterhouseCoopers.

Overall revenue increased 35% last year to $16.9 billion, due in large part to record fourth-quarter revenue of $4.8 billion.

Both search revenue and display revenue climbed 31% year-over-year, to $6.8 billion and $5.4 billion, respectively. Search accounted for 40% of last year's revenues, slightly lower than the 41% it commanded in 2005. Display advertising, classifieds, and referrals accounted for 32%, 18%, and 8% of last year's full revenues, respectively.

"The ability for these marketers to achieve both performance-based and branding objectives with interactive advertising is the foundation for this exceptional growth," explained David Silverman, partner, Assurance, PricewaterhouseCoopers.

Consumer-related advertisers accounted for the largest revenue category at 52%, up from 51% in 2005. Financial services, the second-largest category, accounted for 16%, followed by computing advertisers with a 10% share.

Within the consumer category, the biggest sub-categories were retail--with a 47% share--automotive with 22%, and leisure with 13%.

The industry remained highly concentrated among the top ten sellers, which accounted for 69% of revenue last year. Still, this was less than the 72% that top sellers controlled in 2005.

The IAB expects last year's growth to continue apace, according to Randall Rothenberg, president and CEO of the bureau.

"We have every confidence that this growth trend will continue as marketers allocate more of their total marketing dollars to interactive and the industry delivers effective and innovative platforms for connecting with consumers," Rothenberg said Wednesday.

Search, display, classifieds and lead generation all will continue to grow at a healthy rate with an increase in both performance-based and CPM, or impression-based, pricing, the IAB said. In addition, consumer advertisers will continue to represent the largest category of Internet advertising spending.

ADVERTISING FORMATS

2006 (Ttl =$16,879)

2005 (Ttl = $12,542M)

Type of Advertising

$

% share of market

$

% share of market

Display Advertising

3,685

22%

2,508

20%

Sponsorship

496

3%

627

5%

Slotting Fees

0

0%

125

1%

Rich Media (including Broadband Video)

1,192

7%

1,004

8%

All Display

5,373

32%

4,264

34%

Keyword Search

6,799

40%

5,142

41%

Classifieds

3,059

18%

2,132

17%

E-mail

338

2%

251

2%

Lead Generation*

1,310

8%

753

6%

TOTALS:

16,879

100%

12,542

100%

INDUSTRY CONCENTRATION

FY 2006

FY 2005

Top 10

69% ($11,647)

72% ($9,030)

Top 25

82% ($13,841)

86% ($10,786)

Top 50

92% ($15,529)

95% ($11,915)

PRICING MODELS

FY 2006

FY 2005

CPM or Impression

48% ($8,102)

46% ($5,769)

Performance Deals

47% ($7,933)

41% ($5,142)

Hybrid

5% ($844)

13% ($1,630)

Source: Interactive Advertising Bureau/PricewaterhouseCoopers

Recommend Print RSS