• by Wendy Davis  @wendyndavis, March 2, 2006

Online ad revenues in the fourth quarter surged to a record $3.6 billion--up 35 percent from the last three months of 2004, according to a report released Wednesday by the Interactive Advertising Bureau and PricewaterhouseCoopers.

The IAB also estimates that Internet ad spending totaled $12.5 billion for the year, representing a 30 percent increase from 2004. While that growth rate is impressive, it's slightly lower than the 32 percent growth between 2003 and 2004.

This year, growth is likely to decelerate again, although it will probably be at least 20 percent, predicted Greg Stuart, CEO of the IAB. "There comes a point where you wouldn't continue to see the same acceleration year after year after year," Stuart said. In the last five years, the second quarter of 2004 showed the highest growth, with online ad spending increasing by 43 percent over the second quarter of 2003.

The current IAB estimates come on the heels of Yahoo's and Google's fourth-quarter stock reports that also showed double-digit gains--although at a slower growth rate than Wall Street had predicted.

In 2005, Yahoo's fourth-quarter revenue came to $1.5 billion, representing a 39 percent increase over the fourth quarter of the previous year. But in 2004, fourth-quarter revenue posted an increase of 62 percent from the same period in 2003. Google's fourth-quarter revenues came to $1.919 billion, which marked an 86 percent increase over the previous year. But that growth was less than in 2004, when fourth-quarter revenues more than doubled from 2003.