Commentary
Full Year Interactive Ad Revenues Up 33% 2004, Expect Another 34% in 2005
- by Jack Loechner , Staff Writer @mp_research, May 9, 2005
The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers released the Internet Advertising Revenue Report showing the final numbers for the full year 2004. The report states that overall industry revenues rose nearly 33 percent over 2003 totaling over $9.6 billion and exceeded the previous revenue record in 2000 by nearly 20 percent. E-Marketer forecasts an increase in 2005 as well.
Greg Stuart, president and CEO of the IAB, said "Interactive Advertising has clearly become a mainstream medium and one that can no longer be ignored as a critical piece of any marketing mix."
- Consumer advertisers account for 49 percent of the 2004 annual revenues, up significantly from the 37 percent reported for the same period in 2003.
- The largest sub-categories under the consumer umbrella include retail, automotive, leisure, entertainment and packaged goods.
- As a percent of 2004 total revenues, Computing and Financial Services account for 18 percent and 17 percent respectively, with Telecommunications and Pharmaceutical & Healthcare rounding out the total at 4 percent and 6 percent respectively.
Pete Petrusky, Director, Advisory Services, PricewaterhouseCoopers, says "The revenue results reported for 2004 confirm a very healthy environment for online advertising, for both direct marketers seeking immediate performance results, as well as brand advertisers looking to create or enhance an image, product or service."
Performance details of particular industry categories:
Ad Revenues Broken Down By Formats (2004 full year revenue) | ||||
| 2004 | 2003 | ||
Type of Advertising | $ (million) | % share of market | $ (million) | % share of market |
Display Advertising | 1,829 | 19% | 1,526 | 21% |
Sponsorship | 770 | 8% | 727 | 10% |
Slotting Fees | 193 | 2% | 218 | 3% |
Rich Media | 963 | 10% 7 | 27 | 10% |
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All Display | $3,754 | 39% | $3,197 | 44% |
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Search | 3,850 | 40% | 2,543 | 35% |
Classifieds | 1,733 | 18% | 1,235 | 17% |
96 | 1% | 218 | 3% | |
Referrals | 193 | 2% | 73 | 1% |
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TOTALS: | $9,626 | 100% | $7,267 | 100% |
Source: : IAB-PriceWaterhouseCoopers May 2005 | ||||
In 2004, consumer advertisers continued to lead the way in online advertising spending accounting for 49% of total revenues.
Top Five Categories by Online Ad Spending | ||
Category | 2004 | 2003 |
Consumer | 49% | 37% |
Computing | 18% | 20% |
Financial Services | 17% | 12% |
Pharma & Healthcare | 6% | 4% |
Telecom | 4% | 4% |
Source: : IAB-PriceWaterhouseCoopers May 2005 | ||
While CPM pricing continues to be the predominant choice for buyers and sellers, growth in performance-based deals continued in 2004.
Pricing Models | ||
Price Model | 2004 | 2003 |
CPM/Impression | 42% | 43% |
Performance-based | 41% | 37% |
Hybrid | 17% | 20% |
Source: : IAB-PriceWaterhouseCoopers May 2005 | ||
And, as noted, a recent eMarketer release projects a continued strong growth for 2005 and forecasts through 2009:
US Online Ad Spending(billion $) and Growth (% vs. previous year) | ||
| Growth | Spending |
2001 | -11.8% | $7.1 |
2002 | -15.8 | 6.0 |
2003 | 20.9 | 7.3 |
2004 | 32.5 | 9.6 |
2005 | 33.7 | 12.9 |
2006 | 21.2 | 15.6 |
2007 | 14.1 | 17.8 |
2008 | 13.5 | 20.2 |
2009 | 10.4 | 22/3 |
Source: IAB-PriceWaterhouseCoopers, eMarketer, May 2005 | ||
IAB/PwC Full-Year 2004 Internet Ad Revenue Figures.
Jack Loechner is the Editor of The Center for Media Research's daily Research Brief. You can reach him at jack@mediapost.com.