Tuesday, December 4, 2001
Internet ADVERTISING REVENUE HOLDS STEADY AS ALL AD SECTORS DECLINE

IAB Internet Advertising Revenue Report Pegs Total at $1.792 Billion For 3Q 2001

New York, NY - December 4, 2001 - Internet advertising in the United States held steady in the third quarter of 2001, totaling $1.792 billion, down 4.1 % from Q2's $1.868 billion. The first nine months of 2001 revenue stands at $5.55 billion, compared to $6.06 billion for the first three quarters of 2000, off 8.4%. This, according to the Interactive Advertising Bureau's (IAB) Internet Ad Revenue Report, which is conducted independently by PricewaterhouseCoopers, New Media Group.

"While the online revenue reported has shown little change from the previous two quarters, the fact that our industry is holding steady should be looked at as a positive sign," said IAB President & CEO Greg Stuart. "The $1.792 billion in revenue for the quarter indicates that the Internet is holding it's own against what we have been hearing about other advertising sectors, indicating that, contrary to popular belief, advertisers are not deserting the medium and in fact are committed to the Internet long term."

The general malaise in all advertising sectors has been buffeted by the slowing economy and the tragic events of September 11, with variously reported declines in many sectors in the double digits. The fact that Internet advertising has held steady, recording a modest 4.1% decline from the second quarter of the year can be attributed to the fact that traditional advertisers are maintaining or increasing the level of their online presence, and that the Interactive Marketing Unit guidelines issued by the IAB earlier this year, are working. In fact, a recent AdRelevance survey concluded that these units are gaining traction, with their usage growing significantly.

"It appears that traditional advertisers are devoting a greater percentage of their budgets to online advertising, shifting budgets to mirror the shifting consumption of online media by their customers, and are loathe to desert the medium that they all know holds the greatest future potential for them," noted Tom Hyland, Chair, PricewaterhouseCoopers New Media Group. "There is no more gravy train, but the slight decline in this quarter's revenues bodes well for the industry in a fluid market."

The consumer-targeted category continues to be the largest overall segment for the third quarter of 2001 (29%) with the retail segment of the consumer category (51%) driving ad revenues.


 

Q3

Q2

Consumer

29%

30%

Computing

19%

18%

Business Services

10%

8%

Financial Services

12%

13%

Media

14%

10%

Consolidation within the industry, which started in earnest several quarters ago, continues, with revenues more heavily consolidated within large media companies.


 

Q3

Q2

Top 10 Media Companies

75%

76%

Top 25 Media Companies

87%

89%

Top 50 Media Companies

95%

96%

Internet Ad Revenue by Pricing Model


 

Q3

Q2

Straight CPM

48%

51%

Hybrid

39%

39%

Straight Performance

13%

10%

Ad Formats Diversify

Formats tracked and their respective share of revenue third quarter, compared to the second quarter are:


 

Q3

Q2

Banners

35%

36%

Sponsorships

25%

28%

Classifieds

17%

16%

Slotting Fees

7%

8%

Interstitials/Superstitials®

3%

3%

Key Word Search

5%

3%

Rich Media

3%

2%

Email

3%

3%

Referrals

2%

2%

"As the industry continues to develop, the IAB/PwC Internet Ad Revenue Report has tracked the evolution of the various ad formats," noted Pete Petrusky, Director, PricewaterhouseCoopers New Media Group. "Classified ads remain as the strongest growing format, accounting for 17% of revenue for the quarter. This is the first year we have identified slotting fees - the fee charged for premium ad placement and/or exclusivity- which made up 7 percent of the revenues for the third quarter of 2001, down a point. Banners, while decreasing, are still the predominant format, contributing more than one-third of online revenues."

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 all companies that sell meaningful online advertising revenues. The results reported are the most accurate measurement of online advertising revenues because 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.

About PwC
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.

About the IAB
Founded in 1996, the IAB is the industry's leading interactive advertising association. Its activities include evaluating and recommending guidelines and best practices, fielding research to document the effectiveness of interactive media, and educating the advertising industry about the use of interactive advertising and marketing. Membership includes companies that are actively engaged in the sale of interactive advertising and marketing.

Contact:

Marla Nitke IAB
212-380-4714
[email protected]