Tuesday, August 8, 2000

New Ad Types In Reporting Added Reflecting Growth Of Creativity In Online Formats

New York, NY - August 8, 2000 - Less than a year after Internet advertising revenues broke the billion dollar mark per quarter in the United States, it is fast approaching the two billion dollar per quarter mark as revenues for the first quarter of 2000 hit $1.953 billion. The Internet Advertising Bureau's (IAB) Internet Ad Revenue Report, conducted independently by PricewaterhouseCoopers also reported that revenues for the first quarter grew 9.9 per cent over the fourth quarter of 1999, and 182 per cent over the comparative first quarter of 1999.

In compiling the quarterly report, PricewaterhouseCoopers has expanded the categorization of the types of ads being used, reflecting the significant growth in creativity and formats which advertisers are using in their online messaging. In addition to monitoring banners, sponsorships, interstitials and email, the report will now also track classifieds, referrals, rich media and keyword searches. "We have become accustomed to the continued sustained growth of online ad revenues and the report for the first quarter of 2000 continues that very positive trend. What is of prime importance is that we have even greater growth than we had last year with even larger numbers," noted Rich LeFurgy, Chairman of the Internet Advertising Bureau and General Partner of WaldenVC. "While the market correction and subsequent dot.com closures likely had some impact in slowing growth in the second quarter, (revenues that are being compiled now by PricewaterhouseCoopers,) the continued and growing numbers of large traditional advertisers expanding their budgets for Internet campaigns are really the news here. Time will tell what effect, if any, recent developments will have on the growth of online advertising, but the combined brand building, targeting, one-to-one marketing and ecommerce capabilities of the Internet will continue to fuel revenue growth throughout the year."

According to the report, the categories which lead online spending during the first quarter were consumer-related (31%), financial services (15%), computing (15%), new media (12%) and business services (10%). The report also found that the overwhelming number of revenue transactions, (94 %) continue to be cash-based with barter/trade and packaged deals accounting for 5% and 1% of total revenues respectively. Banner advertisements continue to be reported as the predominate type of advertising, accounting for 52% for Q1, sponsorships at 27%, interstitials at 3% and email at 3%. The types of advertising being delineated for the first time include classifieds (4%), referrals (3%), rich media (2%) and keyword searches (1%). All other ad types accounted for 5 % of the total.

Reflecting the continuing strength of e-commerce, hybrid deals accounted for 48%, with CPMs or impression-based deals at 42 % and performance-based deals at 10% for the quarter. "An indication of the health of the online advertising industry is that there are no major surprises here," said Tom Hyland, Chair, PricewaterhouseCoopers New Media Group. "In fact, the higher rate of growth on a higher base, while not totally unexpected, points to the robustness of the medium as it matures. With no major upheavals for the first quarter of 2000, growth has remained steady and consistent across all of the areas we track. An additional healthy sign of the industry's maturation is the growth of ad types, allowing us to reflect the growing use of classifieds, referrals, rich media and keyword searches."

Conducted by the New Media Group of PricewaterhouseCoopers on an ongoing basis, with results released quarterly, the "Advertising Revenue Report" was started by the IAB in 1996, and represents data from more than 200 companies representing thousands of sites. The results reported are the most accurate measurement of online advertising revenues since the data is compiled directly from information supplied by companies selling advertising on the Internet. All-encompassing in nature, the survey includes data concerning online advertising revenues from Web sites, commercial online services, free e-mail providers, and all other companies selling online advertising.

PricewaterhouseCoopers (www.pwcglobal.com), the world's largest professional services organization, helps its clients build value, manage risk and improve their performance. The PricewaterhouseCoopers New Media Group -- with offices in New York, Los Angeles, Seattle, San Francisco Bay Area, and Boston -- combines content and technology specialists to provide comprehensive service to dynamic entrepreneurial companies. Services include management consulting, business assurance services, ad delivery and privacy attestation and consultation, assistance with mergers and acquisitions, tax planning and compliance, capital structuring and employee benefits and executive compensation packages.

Drawing on the talents of more than 150,000 people in 150 countries, PricewaterhouseCoopers provides a full range of business advisory services to leading global, national and local companies and to public institutions. These services include audit, accounting and tax advice; management, information technology, strategic and human resource consulting; financial advisory services including mergers & acquisitions, business recovery, project finance and litigation support; business process outsourcing services; and legal services through a global network of affiliated law firms.

Founded in 1996, the IAB is the leading online advertising association with over 300 active members. Its activities include evaluating and recommending standards and practices, fielding research to document the effectiveness of the online medium and educating the advertising industry about the use of online advertising. Current membership includes companies that are actively engaged in the sales of Internet advertising, with associate membership including companies that support advertising, -- interactive advertising agencies, measurement companies, research suppliers, technology suppliers, traffic companies and other organizations from related industries. A global organization, the IAB has member countries including Canada, Belgium, France, Germany, Holland, Hong Kong, Italy, Switzerland and the United Kingdom, and is currently developing membership countries in Asia and Latin America, as well as other countries in Europe. The IAB and the Internet Local Advertising & Commerce Association (ILAC) agreed to combine their organizations in July of 1998.


Marla Nitke IAB
[email protected]