Thursday, April 20, 2006
INTERNET ADVERTISING REVENUES GROW 30% TO A RECORD $12.5 BILLION IN ’05

Fourth Quarter of 2005 Continues a Trend of Quarter over Quarter Growth and Marks the Highest Quarter of Revenue Ever Reported

New York, NY (April 20, 2006) – The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) today released the Internet Advertising Revenue Report including final numbers for Q3, Q4, and full year 2005.  The report states that Search, Classifieds, Display, and Rich Media all continue to grow at a healthy rate.  Overall internet advertising revenues (U.S.) for 2005 totaled $12.5 billion, a new annual record exceeding 2004 by 30%.  Q4 2005 internet advertising revenues totaled a record $3.6 billion, representing a 34% increase over same period in 2004.

”Interactive Advertising continues to experience tremendous growth as marketers experience its overall effectiveness in building brands and delivering online and offline sales,” said Greg Stuart, CEO, Interactive Advertising Bureau. “We are confident that this growth trend will continue as more marketers find Interactive to be an imperative and additional platforms including broadband video, gaming, iPTV and others continue to emerge as real opportunities.”


“The Internet continues to be a vibrant and ever-changing channel, providing advertisers with broad offerings that enable them to promote their brands using a highly cost effective platform,” says David Silverman, Partner, Assurance, PricewaterhouseCoopers. “This year’s record figure of annual internet advertising revenue demonstrates the enduring enthusiasm for the medium as a whole.”

“Continued strong growth in online advertising documents that an increasing number of advertisers and marketers see the Internet is an essential brand-building component in their media planning,” adds Peter Petrusky, Director, Advisory, PricewaterhouseCoopers. “The Internet delivers the right audience at the right time - a winning combination for all types of marketers. We expect to see continued growth in Internet advertising spend."

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

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

 

2005 (Ttl = $12,542M)

2004 (Ttl = $9,626M)

Type of Advertising

$

% share of market

$

% share of market

Display Advertising

2,508

20%

1,829

19%

Sponsorship

627

5%

770

8%

Slotting Fees

125

1%

193

2%

Rich Media

1,003

8%

963

10%

All Display

4,264

34%

3,754

39%

Keyword Search

5,142

41%

3,850

40%

Classifieds

2,132

17%

1,733

18%

E-mail

251

2%

96

1%

Referrals/Lead Generation*

753

6%

193

2%

TOTALS:

12,542

100%

9,626

100%


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

Industry Concentration – Industry revenue concentration remains high.

 

FY 2005

FY 2004

Top 10

72% ($9,030)

72% ($6,931)

Top 25

86% ($10,786)

87% ($8,374)

Top 50

95% ($11,915)

95% ($9,145)

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

 

FY 2005

FY 2004

CPM or Impression

46% ($5,769)

42% ($4,043)

Performance Deals

41% ($5,142)

41% ($3,947)

Hybrid

13% ($1,630)

17% ($1,636)

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. PwC does not audit the information and provides no opinion or other form of assurance with respect to the information.

For a copy of the full report click 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 to build public trust and enhance value for its clients and their stakeholders.  More than 130,000 people in 148 countries work collaboratively using connected thinking to develop fresh perspectives and practical advice.

“PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.


About the IAB:
Founded in 1996, the Interactive Advertising Bureau (www.iab.net) represents over 250 leading interactive companies that actively engage 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 about interactive advertising.


For any questions about IAB news please contact:  
Marla Nitke
212 380 4714
[email protected]

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