IAB Report: Fourth consecutive year of growth of US online ad revenues
US online advertising revenues continue to grow at an impressive rate. In 2007 it exceeded $21 billion, over 25% more then in the previous year. That is according to “2007 Internet Advertising Revenue Report” conducted by PricewaterhouseCoopers for IAB (Interactive Advertising Bureau).
While there is a decline in the growth rate comparing with the prior years, Internet remains to be the fastest growing medium in terms of ad spending. Recently published Nielsen study reported that an overall US ad spending increased only by 0.6% in 2007 versus 2006.
When commenting the results of the IAB report, Randall Rothenberg, President and CEO of IAB said: “This achievement is a testament to the continued vitality of interactive. Explosive innovation in the industry is providing marketers with new and unique ways to reach consumers—it’s a very exciting time.”
Key Highlights of the IAB Report
Search and display ads continue to drive the growth
Search remains to be the most important online ad format in terms of revenues. Search advertising revenues increased by 30% from $6.8 billion in 2006 to $8.8 billion and generated 41% of total 2007 yearly revenues.
Display related ads, which include display ads, rich media, digital video and sponsorship accounted for 34% of full-year revenues and totaled $7.1 billion. For the first time IAB broke out video which used to be included in rich media formats category. It generated 2% of total revenues while the share of rich media augmented from 7 to 8% even without the contribution of video ads.
Consumer advertisers continue to lead
Consumer advertisers represent the largest industry category. In 2007 they generated 55% of full year revenues comparing with 52% in the previous year. In the key category, 47% of the Internet ad spending was held by Retail, followed by Automotive (21%), Leisure (13%), Entertainment (9%) and Packaged Goods (8%).
Shift to performance-based pricing models
The share of performance based revenues increased from 47% up to 51% whereas the share of CPM-based pricing shrank to 45%.
The full IAB report is available here.