April 21, 2006
According to a report by the Interactive Advertising Bureau, online advertising set a new record last year of $12.5 billion. This is a 30% increase over the previous high of $9.63 billion in 2004.
It isn't any surprize that search is still the number one generator of revenue, as it represented $5.1 billion, which is 41 percent of the 2005 total. This is up from the 39 percent it garnered in 2004.
There was a record setting pace in Internet ads also as they came in with a total of $3.6 billion in the fourth quarter, 15% higher than the previous record of $3.1 billion.
Greg Stuart, chief executive of the IAB, commented in a statement that "Interactive advertising continues to experience tremendous growth as marketers experience its overall effectiveness in building brands and delivering online and offline sales."
He added that growth should expand greatly as advertisers learn the best ways to use broadband video, Internet-based television and online games.
What should be good news for all of us online marketers is that even with all of this growth, Internet advertising still only represents 5 percent of all U.S. advertising revenue, up 1% from 2004.
Merrill Lynch media analyst Lauren Rich Fine believes that Internet ad spending could grow by over 25 percent this year, which would surge past magazines and the Yellow Pages as preferred vehicles.
While search is still the leading advertising choice, others are growing also.
Banners and various display ads are the next largest choice as they provided 21% of 2005 revenue. Online classified ads come in third with 17% of the total.
Consumer-targeted ads, like those for drug stores, toys, retail stores, travel services and cars, added up to half of last year's revenue.
Financial services and computing made up about 12% each, and telecommunications companies represented 7%.
