The rise and fall and rise of the Internet

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May 7, 2005 The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) this week released the Internet Advertising Revenue Report including final numbers for Q3, Q4 and full-year 2004. If there was any doubt that the internet was back as a major force in the world of advertising and communications, it was dispelled by the reportThe report states that Search, Classifieds, Display and Rich Media continue to grow at a healthy rate. Overall industry revenues rose nearly 33 percent over 2003 totaling over US$9.6 billion and exceeded the previous revenue record in 2000 by nearly 20 percent. Q4 2004 revenues totaled a record US$2.69 billion, marking the highest quarter ever reported.

It’s just over ten years since the first banner advert was run on the internet and in that time it has seen all extremes – from the fledgling industry of ten years ago struggling to explain what it was, to being the hottest game in town, to being the coldest game in town, and right now, despite many people having burned their fingers all the way to the elbow, it is again being scheduled for a significant share of every advertising budget.

"Interactive Advertising has clearly become a mainstream medium and one that can no longer be ignored as a critical piece of any marketing mix,” said Greg Stuart, president and CEO of the IAB.

“The PwC 2004 reported figures indicate that Interactive is firing on all cylinders including display, search and classifieds and is squarely on track to surpass consumer magazine revenues.” Consumer advertisers continue to represent the largest category of advertisers accounting for 49 percent of the 2004 annual revenues, up significantly from the 37 percent reported for the same period in 2003. The largest sub-categories under the consumer umbrella include retail, automotive, leisure, entertainment and packaged goods. As a percent of 2004 total revenues, Computing and Financial Services account for 18 percent and 17 percent respectively, with Telecommunications and Pharmaceutical & Healthcare rounding out the total at 4 percent and 6 percent respectively.

“The increased adoption of Broadband will continue to evolve the face of Interactive Advertising as more compelling media ads and video formats are created,” notes Tom Hyland, Partner, PricewaterhouseCoopers. “More and more, brand marketers will look to interactive as an integral platform to deliver rich experiences for brand building and enhancement.”

“The revenue results reported for 2004 confirm a very healthy environment for online advertising, for both direct marketers seeking immediate performance results, as well as brand advertisers looking to create or enhance an image, product or service, said Pete Petrusky, Director, Advisory Services, PricewaterhouseCoopers. “Moreover, the Internet is the only medium to adopt a global standard for impression measurement, intended to simplify the buying and selling process for online advertising.”

A copy of the full report is available for download free of charge at the IAB site. The IAB sponsors the Internet Advertising Revenue Report, which is conducted independently by the New Media Group of PwC.

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