$693 Million Sets Pace For Another Record-Setting Year
Growth Unabated as Industry Sees Thirteenth Consecutive Record-Setting Quarter, Led By Continued Strength In Consumer and E-Commerce Advertiser Spending
New York, NY – August 17, 1999 – Internet advertising revenue hit $693 million for the first quarter of 1999, nearly doubling the $351 million that was recorded in the first quarter of 1998, according to the Internet Advertising Bureau’s (IAB) Internet Ad Revenue Report. The latest figures further underscore several themes characterizing industry growth: increased advertiser confidence in the medium, consumer advertisers leading the charge, and continued strength in hybrid pricing models. The report, released today, is conducted independently by the New Media Group of PricewaterhouseCoopers for the IAB.
“One of the things that makes the Internet a powerful and dynamic medium is the speed with which it can adapt and accept new business models that work. The emergence of hybrid pricing models combined with overall retail strength are an example of how e-commerce advertisers are beginning to add to overall online spending,” noted IAB chairman Rich LeFurgy. “Taking into account the traditional softness of the first quarter, a trend which for the past three years has seen it account for between 11 and 20 percent of annual growth, our industry is on a $3 billion plus run rate, reinforcing its continued robust nature.”
“Industry revenues continue to rise, due in no small part to the maturation of the way in which all segments of the business are working together to improve the online experience for users,” said Tom Hyland, Chair, PricewaterhouseCoopers New Media Group. “New and unique business models, combined with increased usage lead us to expect sustained growth of the
medium, reflected in increased online ad budgets and greater commitments by the larger traditional advertisers.”
The categories which lead online spending during the first quarter were consumer-related (27%), financial services (21%), computing (20%), retail/mail order (13%) and new media (8%). The report also found that the overwhelming number of revenue transactions, (92%) continue to be cash-based with barter/trade and packaged deals accounting for 7% and 1% of total revenues respectively. Banner advertisements continue to be reported as the predominate type of advertising, up slightly this quarter and accounting for 58%, with sponsorships (29%), interstitials (6%), email (1%), with all others at 6%. When looking at pricing models, hybrid pricing accounted for 51% of 1999 first quarter revenues, with CPMs or impression-based deals at 43% and performance-based deals at 6% of revenues.
Share of market among the top 50 online publishers continued the trend with the big getting bigger, due in part to industry consolidation. The top 10 publishers received 75% of the revenue in the first quarter of 1999, up from 71% in Q4 of 1998. The top 25 moved from 86% to 88%, with the top 50 notching up to 93% from 92% in 1998.
Conducted by the New Media Group of PricewaterhouseCoopers on an ongoing basis, with results released quarterly, the “Advertising Revenue Report” was started by the IAB in 1996, and represents data from more than 200 companies representing over 1500 Web sites. The results reported are the most accurate measurement of online advertising revenues since the data is compiled directly from information supplied by companies selling advertising on the Internet. All-encompassing in nature, the survey includes data concerning online advertising revenues from Web sites, commercial online services, free e-mail providers, and all other companies selling online advertising.
PricewaterhouseCoopers (www.pwcglobal.com), the world’s largest professional services organization, helps its clients build value, manage risk and improve their performance. The PricewaterhouseCoopers New Media Group — with offices in New York, Los Angeles, Seattle, San Francisco Bay Area, and Boston — combines content and technology specialists to provide
comprehensive service to dynamic entrepreneurial companies. Services include management consulting, business assurance services, ad delivery and privacy attestation and consultation, assistance with mergers and acquisitions, tax planning and compliance, capital structuring and employee benefits and executive compensation packages.
Drawing on the talents of more than 150,000 people in 150 countries, PricewaterhouseCoopers provides a full range of business advisory services to leading global, national and local companies and to public institutions. These services include audit, accounting and tax advice; management, information technology, strategic and human resource consulting; financial
advisory services including mergers & acquisitions, business recovery, project finance and litigation support; business process outsourcing services; and legal services through a global network of affiliated law firms.
Founded in 1996, the IAB is the leading online advertising association with over 300 active members. Its activities include evaluating and recommending standards and practices, fielding research to document the effectiveness of the online medium and educating the advertising industry about the use of online advertising. Current membership includes companies that are actively engaged in the sales of Internet advertising, with associate membership including companies that support advertising, — interactive advertising agencies, measurement companies, research suppliers, technology suppliers, traffic companies and other organizations from related industries. A global organization, IAB member countries include Belgium, Canada, France, Germany, Holland, Italy, Switzerland and the United Kingdom, and is currently developing membership countries in Asia and Latin America, as well as other countries in Europe. The IAB and the Internet Local Advertising & Commerce Association (ILAC) agreed to combine their organizations in July of 1998.