• by Laurie Petersen , March 8, 2007

Internet ad spending grew 34% to hit a record high of $16.8 billion in 2006--with fourth-quarter spending the highest quarter to date, reported the Interactive Advertising Bureau Wednesday in its estimate of the year's spending based on data collected by PricewaterhouseCoopers for the top 15 online ad sellers.

In the traditionally strong fourth quarter, the IAB said, Internet advertising totaled an estimated $4.8 billion--up 32% over the period for the previous year, and a 15% increase over the third quarter of 2006.

"The increase underscores marketers' understanding that interactive advertising can engage consumers, build brands and sell products and services," said Randall Rothenberg, IAB president and CEO.

"The maturation of the Internet as an effective advertising medium is directly tied to its ability to deliver qualified audiences to marketers," said Peter Petrusky, director, PricewaterhouseCoopers. "Online advertisers continue to test how to use the Internet with other media to leverage a combination of consumer touch points across different media."

The PricewaterhouseCoopers final year-end report is due for release in April.

Other recent forecasts, while bullish, have forecast a slowdown in advertising growth rates.

Research firm eMarketer forecast that online ad spending growth will slow to less than 19% this year after three straight years of more than 30% gains. In one of the most bullish forecasts, Jefferies & Co. projects a 25% compound annual growth rate through 2010, with display or brand advertising online (including classifieds and lead generation) experiencing a 19% CAGR for the period. Microsoft's Mich Mathews predicted at the AAAA Media Conference last week that Microsoft would follow its consumers and shift the bulk of its estimated $1 billion in media spending online by 2010.