Online Sets New Ad Record, Q4 Sales Outpace Dot-Com Boom's
- by Ross Fadner , February 13, 2004
Advertisers invested $2.2 billion in the medium during the quarter and $7.2 billion for full-year 2003--a 20 percent gain over 2002--the IAB and PWC said Thursday.
Previously, the record quarter for interactive ad growth was the fourth quarter of 2000, with a total of $2.12 billion. Based on estimates issued in December 2003 by Universal McCann, the Internet now leads all other media in the rate of advertising revenue growth for the year.
"I'm not at all surprised at these revenue numbers," said Greg Stuart, president and CEO of the IAB. "Based on sound business principles, the industry has grown up, and become a great competitive advantage for those marketers who have been paying attention."
Stuart cites four important factors that have driven online advertising growth in the United States: a shift in consumer behavior patterns; the Internet's unparalleled ability to collect and track data; new standards and guidelines laid out by standards and practices groups. And, as Stuart exclaimed, "Where else are marketers going to spend? TV? Over-spending on TV has really been a disaster: it's costing marketers more while delivering less."
Stuart emphasizes that the area the Internet excels in, where other mediums falter, is data measurability: tracking click-throughs, conversions, and ROI. "Other media advertising standards were built on fear, not data," he said.
Charlene Li, principal analyst at Forrester Research, noted that the economy's recovery left marketers with a larger spending purse in 2003. "Marketing budgets were up this year," said Li. "Rising tides lift all boats."
Jupiter Research Analyst Nate Elliott thinks the recovery was driven on both sides, as marketers and publishers formulated a better sense of how to leverage the Internet's strengths and work together. "A big part was publishers understanding how to sell their inventory more efficiently: who would want to buy which space, where, what units and what pricing," he said.
As for the ad formats that have driven the 2003 growth, Stuart claimed that the IAB's individual sector data won't be available for a few months. Nonetheless, he notes that there's no denying the impact of search, rich media, and high-speed Internet adoption. Other analysts agreed.
eMarketer reports that search is by far the main driver. "While the 20 percent gain for overall U.S. online ad spending points to a healthy market, the engine pulling that growth train is paid search, which soared by 123 percent in 2003," said Senior Analyst David Hallerman.
Jupiter's Elliott and Forrester's Li both agree that search really drove ad revenue growth in 2003."Search saved advertising from itself a few years ago, and will continue to drive online ad revenue growth," Elliott said.
Elliott and Li also added that broadband video will continue to be a huge driver for the future. "Rich media is gonna be huge," exclaimed Li, adding that this is especially true for companies who can lure the big brands, like MSN. Elliott mentions that broadband video presents "an easy, logical transition point" for the larger traditional marketers who have shied away thus far from online advertising. Through rich media-enabled broadband video marketers could essentially rehash their 30-second TV spots online if they wanted to. As Elliott said of Internet-wary traditional marketers, "get the money online, get them comfortable any way you can, and then we can take online advertising to the next level."
Jupiter Research reports that rich and streaming media accounted for 11 percent of online ad spending. They expect this number to be as high as 39 percent by 2008.
