Thursday, October 4, 2007
Internet Advertising Revenues Continue to Soar, Reach Nearly $10 Billion in First Half of '07

Historic Second Quarter: Revenues Exceed $5 Billion for the First Time

NEW YORK, October 4, 2007 The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) today released the IAB Internet Advertising Revenue Report covering the second quarter and the first six months of 2007. Internet advertising revenues (U.S.) for the first six months of 2007 were nearly $10 billion, setting yet another new record and representing a nearly 27 percent increase over the first half of 2006. Internet advertising revenue totaled nearly $5.1 billion for the second quarter of 2007, exceeding the $5 billion mark for the first time in a quarter, a 25.4 percent increase over the same period in 2006.

"The torrid growth of interactive advertising revenue persists and these results are really no surprise but very welcome news," said Randall Rothenberg, president and CEO of the Interactive Advertising Bureau. "More and more marketers have embraced the reality that interactive is the fulcrum on which their brand strategies need to be based and we expect robust growth to continue."

"The first six months of 2007 has continued the trend over the past several years of strong sequential growth," said David Silverman, partner, Entertainment, Media & Communications Practice, PricewaterhouseCoopers. "The growth, which was led by strong increases in the consumer advertising sector, continues to point to the mainstream acceptance of the medium and advertisers' continuing reliance on it."

"The Internet is well established as a key media distribution channel for driving advertising," said Pete Petrusky, Director, Entertainment, Media & Communications Practice, PricewaterhouseCoopers. "The recent results demonstrate that advertisers recognize the continued growth in the online audience and the growing opportunity to target and monetize that audience."

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

Advertising Formats - Search and Display continue to be leading formats.

 

FH 2006

FH 2007

Search

40% ($3,164)

41% ($4,097)

Classifieds

20% ($1,582)

17% ($1,699)

Referrals/Lead Generation

7%($592)

8% ($799)

E-mail

2% ($158)

2% ($200)

Display Related:

31% ($2,413)

32%($3,198)

Rich Media (Includes Video)

6% ($475)

8%($799)

Ad Banners / Display Ads

21% ($1,622)

21%($2,099)

Sponsorships

4% ($316)

3% ($300)

Slotting Fees

<1% (<1$)

<1% (<$1)

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

 

FH 2006

FH 2007

Top 10

71%

70%

Top 25

84%

82%

Top 50

94%

91%

Pricing Models Performance deals are now the leading pricing models, followed closely by CPM deals.

 

FH 2006

FH 2007

CPM

48% ($3,797)

45%($4,497)

Performance Deals

47% ($3,717)

50%($4,997)

Hybrid

5% ($395)

5% ($499)

Conducted by the New Media Group of PricewaterhouseCoopers, the IAB Internet Advertising Revenue Report was launched by the IAB in 1996, and comprises 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 IAB Internet Advertising Revenue Report, which is conducted independently by the New Media Group of PricewaterhouseCoopers. The full report is issued twice yearly for full and half-year data, and top-line quarterly estimates are issued for the first and third quarters.

A copy of the full report is available at www.iab.net/pwc_half_year_2007

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 140,000 people in 149 countries across our network share their thinking, experience and solutions 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 300 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 is dedicated to the continuing growth of the interactive advertising marketplace, of interactive's share of total marketing spend, and of its members' share of total marketing spend. The IAB evaluates and recommends standards and practices, fields interactive effectiveness research, and educates the advertising industry about interactive advertising.

IAB Media Contact:
Marla Nitke
212.380.4714
[email protected]

PricewaterhouseCoopers Media Contact:
Kathyrn Oliver
860.241.7333
Kathyrn.o[email protected]

Or

Linden Alschuler & Kaplan for PricewaterhouseCoopers:
Suzanne Dawson
212.329.1420
[email protected]