Internet ad revenue sets new record

Internet advertising revenues in the U.S. for the first six months of 2005 were approximately $5.8 billion, a new record and a 26% increase over the first half of 2004, according to a new report. Internet advertising revenue totaled $2.985 billion for the second quarter of 2005, representing a 26% increase over same period 2004. Second quarter 2005 revenues represent a 6.6% increase over the first quarter of 2005.

The report, released Monday, was conducted by Interactive Advertising Bureau and PricewaterhouseCoopers.

“It is clear from this continued growth, that most agencies and marketers are now committed to Interactive as a critical medium in reaching their audiences, as well as engaging them in more immersive brand experiences,” said Greg Stuart, president and CEO of the IAB. “The consistent growth in overall revenues shows marketers may be shifting more of their total advertising budgets to online,” added David Silverman, partner, PricewaterhouseCoopers. This is a natural development as research shows more consumers are spending a larger percentage of their media time online, while the flow of advertising dollars follows.” Search revenue increased 27% for the first half of 2005, and at $2.3 billion comprised 40% of the online ad market. Rich media revenue increased 26%, and at $463 million makes up 8% of that market. Rich media is defined as advertisements that integrate some component of streaming video and/or audio and interactivity. This year’s report includes a redefined Referral category that specifically includes Lead Generation, the more common industry language for this category of activity. The Referral/Lead Generation category at $347 million is 6% of total spending. “Recent results show marketers recognize the Internet as an effective response and branding vehicle, as evidenced by the continued strength in Search and Rich Media,” said Peter Petrusky, director, Advisory Services, PricewaterhouseCoopers.