Tuesday October 3, 1:42 pm Eastern Time
Press Release
Internet Advertising Revenues Pass $2 Billion in Second Quarter 2000
Increase Over Q1 Shows Continued Advertiser Confidence as Traditional Advertisers Add to Online Presence
First Half of 2000 Approaches Full Year 1999
Run Rate In The $8 - 10 Billion Range
Recording its eighteenth consecutive quarter of positive growth in the United States, the Internet advertising industry broke
the 2 billion dollar mark in the second
quarter of 2000, amassing $2.1 billion in revenue. Additionally, the $4.1 billion total for the first half of the year is
approaching 1999's full year total of $4.6 billion, with a run rate in the $8 - 10 billion range. The Internet Advertising
Bureau's (IAB) Internet Ad Revenue Report, conducted independently by PricewaterhouseCoopers also reported that
revenues for the second quarter grew 8.8 per cent, or $171 million over the first quarter of 2000, and 127.3 percent or
$1.2 billion over the comparative second quarter of 1999.
The IAB/PricewaterhouseCoopers Internet Ad Revenue Report is the industry's only historical look at the actual growth of
the Internet advertising industry, spanning over four years of reporting. The report pointedly does not predict future results,
but rather uses data compiled directly from information supplied by companies selling advertising on the Internet, allowing
member companies to create their online media plans in a reality-based environment.
``While the online advertising industry may be taking a breather from its explosive growth over the past several years, a $2
billion quarter signals the continued health of the Internet as it evolves into history's most robust medium for advertisers
and marketers,'' said Rich LeFurgy, IAB Chairman and General Partner in WaldenVC. ``Far from being broken, the
industry is seeing very sizable increases in online advertising from large traditional advertisers. Importantly, the `throw it up
against the wall to see what sticks' test-type efforts are gone, as the ad community now knows that the Internet is a
market-share driver, and the marketplace now understands that this is a brand building and direct marketing medium.''
According to the report, the categories which lead online spending during the second quarter were consumer-related
(30%), computing (17%), financial services (15%), business services (10%), and media (9%). The report also found that
the overwhelming number of revenue transactions (95%) continue to be cash-based with barter/trade and packaged deals
accounting for 5% of total revenues. Banner advertisements continue to be reported as the predominate type of
advertising, accounting for 50% for Q2, sponsorships at 27%, classified ads accounted for 7%, referrals were 4%,
interstitials at 3%, email at 2%, rich media 2% and keyword searches 1%.
Pricing models for Internet advertising remained fairly constant in the second quarter with hybrid deals accounting for
46%, CPMs or impression-based deals at 44% and performance-based deals at 10%.
``In the long term, the robust nature of the Internet will continue to lead the world economy, but there will be some bumps in
the road, as we have seen in virtually every advertising medium as it grows in importance,'' noted Tom Hyland, Chair,
PricewaterhouseCoopers New Media Group. ``A significant finding of this report is that online advertising continued to
increase in the midst of a turbulent phase of the medium's growth, and that advertising became more concentrated in the
higher profile sites and portals, signaling that the smart money is going where the traffic is. The first half of 2000 has
accounted for almost the full year 1999 revenues, and a
run rate in the $8 -10 billion range. The historical fourth quarter bump in ad revenue, combined with the `use it or lose it'
budgets, we look for 2000 to be a very good year for the industry.'' |
