Monday, September 26, 2005
IAB/PWC RELEASE FIRST HALF 2005 INTERNET AD REVENUE FIGURES

Q2 REPORTS CLOSE TO $3 BILLION IN INTERNET ADVERTISING REVENUES

First Half 05 reaches $5.8 Billion 26% increase over 04

New York, NY (September 26, 2005) Today, during the MIXX Conference and Expo, the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) released Internet Advertising Revenues covering Q2 and the first six months of 2005. Internet advertising revenues (U.S.) for the first six months of 2005 were approximately $5.8 billion, a new record and a 26% increase over the first half of 2004. Internet advertising revenue totaled $2.985 billion, just shy of $3 billion for the second quarter of 2005, representing a 26% increase over same period 2004. Q2 2005 revenues represent a 6.6% increase over Q1 2005

"It is clear from this continued growth, that most agencies and marketers are now committed to Interactive as a critical medium in reaching their audiences, as well as engaging them in more immersive brand experiences, said Greg Stuart, president and CEO of the IAB. At the end of the day, it is about increased effectiveness from your marketing dollars and Interactive delivers this.

"The consistent growth in overall revenues shows marketers may be shifting more of their total advertising budgets to online. This is a natural development as research shows more consumers are spending a larger percentage of their media time online, while the flow of advertising dollars follows," said David Silverman, Partner, PricewaterhouseCoopers.

This years report includes a redefined Referral category that specifically includes Lead Generation, the more common industry language for this category of activity. The Referral/Lead Generation category is 6% of total spending.

"Recent results show marketers recognize the Internet as an effective response and branding vehicle, as evidenced by the continued strength in Search and Rich Media. Search increased 27% while Rich Media increased 26%," adds Peter Petrusky, Director, Advisory Services, PricewaterhouseCoopers.

The following highlights key revenue data breakouts; dollar figures are rounded ($ millions):

Ad Formats Internet ad revenues broken down by ad formats are:

 

FH 2005

FH 2004

Search

40% ($2,315)

40% ($1,817)

Display Ads

20% ($1,157)

20% ($942)

Classifieds

18% (1,041)

17% ($782)

Rich Media

8% ($463)

8% ($368)

Referrals/Lead Generation*

6% ($347)

2% ($114)

Sponsorships

5% ($317)

9% ($414)

E-mail

2% ($116)

2% ($70)

Slotting Fees

1% ($58)

2% ($92)

*Renamed category in 2005 specifically including Lead Generation activity; 2004 referred to simply as Referrals

Industry Concentration Concentration of revenues by the top 10, top 25 and top 50 has remained consistent.

 

FH 2005

FH 2004

Top 10

72% ($4,167)

74% ($3,401)

Top 25

87% ($5,035)

89% ($4,096)

Top 50

96% ($5,555)

97% ($4,459)

Pricing Models CPM pricing continues to be the predominant choice for buyers and sellers, at a slight cost to Performance Deals and Hybrid.

 

FH 2005

FH 2004

CPM or Impression

48% ($2,750)

45% ($2,068)

Performance Deals

40% ($2,315)

38% ($1,749)

Hybrid

12% ($722)

17% ($782)

Conducted by the New Media Group of PricewaterhouseCoopers the "Advertising Revenue Report" was started by the IAB in 1996, and represents data from all companies that report meaningful online advertising revenues. The results are considered the most accurate measurement of interactive advertising revenues because the data is compiled directly from information supplied by companies selling advertising on the Internet. 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. First and third quarter revenue reports are estimates, with the actual figures being released along with second and fourth quarter data respectively.

A copy of the full report is available here. The IAB sponsors the Internet Advertising Revenue Report, which is conducted independently by the New Media Group of PwC. The full report is issued twice yearly for full and half-year data, and top-line quarterly figures are issued for the first and third quarters.

About PricewaterhouseCoopers:
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services for public and private clients. More than 120,000 people in 144 countries connect their thinking, experience and solutions to build public trust and enhance value for clients and their stakeholders.

Unless otherwise indicated, "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership. PricewaterhouseCoopers LLP is a member firm of PricewaterhouseCoopers International Limited.

About the IAB:
Founded in 1996, the Interactive Advertising Bureau (IAB) represents over 200 leading interactive companies that are actively engaged in, and support the sale of interactive advertising. IAB members are responsible for selling over 86% of online advertising in the United States. On behalf of its members, the IAB evaluates and recommends standards and practices, fields interactive effectiveness research and educates the advertising industry regarding the use of interactive advertising. For more information, please visit www.iab.net.

Interactive Advertising Bureau

Lynn Trono
212.380.4707
[email protected]

PricewaterhouseCoopers Contact:
Suzanne Dawson
212 329 1420
[email protected]