Monday, September 25, 2006
IAB/PWC RELEASE FIRST HALF 2006 INTERNET AD REVENUE FIGURES

INTERNET ADVERTISING REVENUES CONTINUE TO ACCELERATE AT AN UNPRECEDENTED RATE WITH A 36% INCREASE FOR FIRST HALF OF '06
First Six Months of '06 hit $7.9 Billion and Q2 Exceeds $4 Billion

NEW YORK, NY (September 25, 2006) – 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 2006. Internet advertising revenues (U.S.) for the first six months of 2006 were approximately $7.9 billion, a new record and a 37% increase over the first half of 2005. Internet advertising revenue totaled nearly $4.1billion for the second quarter of 2006, exceeding the $4 billion mark, representing a 36% increase over same period 2005. Q2 2006 revenues represent a 5.5% increase over Q1 2006.

"Interactive delivers an arsenal of options for advertisers no matter their marketing and business objectives. From search, broadband, lead generation, behavioral targeting, consumer generated content and new emerging platforms like mobile and iPTV, Interactive continues to solidify its position as a mainstream medium," said Greg Stuart, CEO of the Interactive Advertising Bureau. "This latest report is a clear indication that Interactive is of increased importance to marketers today to engage their consumers and drive sales."

"The latest results reaffirm the Internet's growing importance for marketers to integrate online advertising into their overall media plans," said David Silverman, Partner, Entertainment & Media Practice, PricewaterhouseCoopers. "While search advertising remains the largest format in terms of revenues, we expect to see new formats like video ads to continue to emerge as advertisers seek to leverage the branding opportunities afforded by the growing installed base of broadband users."

"Internet advertising continues to reach new milestones, exceeding $4 billion in quarterly revenues for the first time, and on pace for another record year of revenues," said Pete Petrusky, Director, Entertainment & Media Practice, PricewaterhouseCoopers. "With the seventh consecutive quarter of growth behind us we are confident that the Internet will continue to reconcile the imbalances between its share of media consumption versus its relative share of total 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 ($ millions):

 

FH 2006

FH 2005

Search

40% ($3,164)

40% ($2,315)

Classifieds

20% ($1,582)

18% ($1,014)

Referrals/Lead Generation

7%($592)

6% ($347)

E-mail

2% ($158)

2% ($116)

Display Related

31% ($2,413)

34% ($1.996)

    Rich Media

6% ($475)

8% ($463)

    Ad Banners / Display Ads

21% ($1,622)

20% ($1,157)

    Sponsorships

4% ($316)

5% ($317)

    Slotting Fees

<1% (<1$)

1% ($58)

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

 

FH 2006

FH 2005 

Top 10

71%

72%

Top 25

84%

87%

Top 50 

94%

96%

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

 

FH 2006

FH 2005

CPM or Impression

48% ($3,797)

48% ($2,750)

Performance Deals

47% ($3,717)

40% ($2,315)

Hybrid

5% ($395)

12% ($722)

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.

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 IAB:
Founded in 1996, the Interactive Advertising Bureau (IAB) represents over 250 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.

IAB Contact
Marla Nitke
Marketing Communications Director
212-380-4714
[email protected]

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