Quarterly Internet Ad Revenues Double
By LISA NAPOLI
Quarterly revenues for Internet advertising have more than doubled in a year, according to an industry report released on Tuesday.
The report, issued by the Internet Advertising Bureau, a trade group based in New York, said that in the third quarter of 1998 revenues had reached $491 million dollars, an increase of 116 percent over the same period in 1997. It was a record-setting quarter for the industry.
Using the first three quarters of 1998 as a gauge, IAB estimated that advertising revenues for the year would eventually total $2 billion. The calculations in the quarterly reports are made by PricewaterhouseCoopers using data from 200 companies that represent more than 1,200 Web sites.
"This is a significant increase. It's a remarkable achievement if you consider how young the medium is," Rich LeFurgy, the president of IAB, said in a conference call with reporters. "It represents the coming of age and the critical mass of online industry spending."
Though the $2 billion annual sum represents just 1 percent of the $200 billion spent each year on advertising in the United States, it does reflect significant gains over other media. It would mean the online medium would outpace outdoor advertising. It would also equal 20 percent of the total spent on advertising on cable television, a more mature medium.
Industry analysts said the report illustrates that the Internet is gaining ground on traditional media.
"It sends a signal both to the agencies and their clients that this is a true mass medium that they're going to have to deal with going forward," said Paul Noglows, who follows consumer media for the Internet Research Group of Hambrecht & Quist, a San Francisco investment bank. Of the increased spending, he said: "It's no longer exotic, no longer an asterisk."
The IAB has worked since 1996 to move the industry into wider acceptance by releasing reports on spending, as well as working to create industry standards. LeFurgy said the first recommendations from four IAB subcommittees working on issues like privacy and online traffic measurement would be released within the next month.
A recent spate of filings for initial public offerings by a number of online agencies is a good sign that advertising online is maturing, LeFurgy said, but he added that the industry still needs to improve its use of the unique aspects of the medium.
"It's more than delivering HTML pages with your favorite TV programs and having fan sites," he said of online campaigns. "It's the ability to close the loop on an informational basis or a transaction basis."
Though television is the most powerful medium ever invented, he said, the Internet is the first to combine the positive attributes of all traditional media in one package.
He acknowledged that the online advertising industry is still in an experimental phase, but cautioned, "The only way to build a company's future is to be online today and not to wait until there's some consensus on what's right."
"To the agencies who had a 'wake me when it's over' attitude, it's here," he added. "Companies and agencies that are no in the online medium are doing it at their own risk."
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Internet Advertising Bureau
PricewaterhouseCoopers
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Lisa Napoli at napoli@nytimes.com welcomes your comments and suggestions.
Wednesday, February 10, 1999
Copyright 1999 The New York Times |
