• by Masha Geller , April 23, 2001

The Internet advertising industry celebrated its fifth birthday in the year 2000 and while the future looks uncertain, the past is officially chronicled.

The Interactive Advertising Bureau released the official Q4 2000 numbers this afternoon and according to Rich LeFurgy, chairman of the IAB, and Pete Petruskey, a PricewaterhouseCoopers analyst, total Internet ad spending for 2000 was $8.2 billion, a 78% increase over 1999. The figure for 4Q 2000 is $2.2 billion, a 9% increase over 3Q.

The bad news is that the Internet advertising sector will probably never again see growth rates like that. "As our base gets bigger and bigger, the days of double and triple digit growth are gone, as they would be for any industry that grew at the rate that the Internet did," LeFurgy said, adding that traditional advertisers are not coming in fast enough to make up for the lost dot-com revenue.

The good news is that the growth rates have stabilized at online ad revenue totaling $2 billion per quarter.

Interestingly, less and less of that revenue comes from banners. The use of traditional banners dropped to 40% of all online ads in Q4, from 46% in Q3. Sponsorships accounted for 31%, classifieds - 10%, referrals - 5%, interstitials - 5%, email - 4%, rich media - 2%, and keyword searches - 2%.

Also, in the Q4 the vast majority of revenue transactions, 92%, (93 % for the year) continue to be cash-based with barter/trade and packaged deals accounting for 7%, (6% for the year) and 1% (1% for the year) of total revenues respectively.