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March 30, 2009
Internet Advertising Revenues Surpass $23 Billion in ’08, Reaching Record High

Q4 '08 Revenues Total $6.1 Billion; Growth Continues Despite Difficult Economy

Internet advertising revenues in the U.S. remain strong, topping $23 billion, according to the 2008 Internet Advertising Revenue Report, released by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC). Despite a difficult U.S. economy, interactive advertising’s continued growth, albeit at a slower pace, confirms marketers' increased recognition of the medium’s value in reaching consumers online where they are spending more and more of their time.



  • Full-year 2008 revenues totaled a record $23.4 billion, exceeding 2007’s performance, itself the former record of $21.2 billion, by $2.2 billion or 10.6%. By comparison, a variety of sources indicate weakness in overall advertising spending. The Nielsen Company, for example, reported that U.S. advertising for the full year 2008 was down 2.6% compared to the full year 2007.
  • Fourth-quarter revenues of $6.1 billion mark the first time the interactive advertising industry achieved, and surpassed, $6 billion in a single quarter. The figures represent a $154 million or 2.6% increase from 2007’s fourth quarter, which had revenues of $5.9 billion.
  • This is the fifth consecutive year of record results.

“We are seeing an ongoing secular shift from traditional to online media as marketers recognize that ad dollars invested in interactive media are effective at influencing consumers and delivering measurable results,” said Randall Rothenberg, president and CEO of the IAB. “In this uncertain economy, where marketers know they need to do more with less, interactive advertising provides the tools for them to build deep, engaging relationships with consumers—the experience marketers gain from this will deliver dividends especially after the economy turns around.”

Search remains the main driver of revenue growth according to the report, showing a 19.8% increase over 2007. Digital video, though still a small overall contributor, more than doubled its revenue with an increase to $734 million from $324 million in 2007, demonstrating how both marketers and consumers are embracing this dynamic platform.

As in 2007, retail, financial services, computing and automotive remained the four largest verticals among Internet advertisers in 2008. Consumer packaged goods, an industry vertical historically slow to embrace interactive advertising, notably increased its share of total Internet ad revenues by 60 percent over 2007. The Internet is now the third largest ad-supported medium, marking its increasing significance to marketers and consumers.

“Though some categories in the fourth quarter slowed or even dipped, reflecting the current economic challenges, the overall performance is up, confirming interactive’s ever-growing importance to the successful marketing mix,” said David Silverman, Partner, Assurance, PricewaterhouseCoopers.

The following chart highlights full-year revenue data breakouts; dollar figures are rounded.

  FY 2008
Share of revenue
$’s (000)

 
FY 2007
Share of revenue
$’s (000)

 
Search 45% ($10,546) 42% ($8,805)
Display Related: 33% ($7,640) 33% ($7,072)
    -Banner Ads 21% ($4,877) 21% ($4,456)
    -Rich Media 7% ($1,642) 8% ($1,656)
    -Digital Video 3% ($734) 2% ($324)
    -Sponsorship 2% ($387) 3% ($636)
Classifieds 14% ($3,174) 16% ($3,321)
Referrals/Lead Generation 7% ($1,683) 7% ($1,584)
E-mail  2% ($405) 2% ($424)

Conducted by the New Media Group of PricewaterhouseCoopers LLP, the Internet Advertising Revenue Report was launched in 1996 by the IAB, and aggregates data from all companies that report meaningful online advertising revenues. The results are considered the most accurate measurement of interactive advertising revenues with the data 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, ad networks, 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.

A copy of the full report is available at: http://www.iab.net/AdRevenueReport