• by Masha Geller , April 9, 2003

I have mostly good news today. According to the IAB's latest release, Internet advertising revenue in the U.S. totaled $1.5 billion for the fourth quarter of 2002, increasing more than 2% from the third quarter, reflecting the first consecutive quarterly increase since the second quarter of 2000. That's a 9.8% decreased from the same period a year earlier, but it marks the first single-digit year-over-year percentage decrease since the first quarter of 2001.

The IAB calculated that Internet advertising for full-year 2002 totaled $5.95 billion, a 17% decrease versus 2001. That's based on top-line data from the top 15 online ad sellers, which historically account for over 80% of total industry revenues, and extrapolated to calculate the total industry revenue figure. The IAB says these estimates will be adjusted in the 2002 full-year report, including data breakouts, to be released next month.

Tom Hyland, Chair of the PricewaterhouseCoopers New Media Group, said the improved performance over the past two quarters "reflects a stabilizing online advertising market, highlighted by continued strength in paid-for-search results. The recent upturn, coupled with forecasts of continued expansion of broadband distribution, bodes well for a strong year in 2003."

According to IAB President and CEO Greg Stuart, what's important to recognize is that the majority of online publishers are profitable, and their revenues continue to rise year-over-year. "In such a volatile economy, we don't want to see an inflated market -- we want to see a mature, level and stable platform, where revenue fluctuations are even with the rest of the advertising business. Based on the mixed results across all media for 2002, that's what I believe we are seeing here."