Fourth Quarter Exceeds $600 Million $1.92 Billion Reported For 1998
Twelfth Consecutive Record-Setting Quarter Underscores Online As Strong Marketing, Branding Medium
New York, NY – May 3, 1999 – With reported ad revenues more than doubling in 1998, the Internet Advertising Bureau has announced that Internet advertising continues its steady climb up the ladder of traditional media outlets with $1.92 billion in revenues, surpassing the estimated $1.58 billion in revenue garnered by outdoor advertising. 1998 online advertising revenue grew by 112 per cent over the $906.5 million for 1997. Fourth quarter 1998 revenues increased $165 million (34%) over the same quarter for 1997, to $655.6 million, the twelfth consecutive record-setting quarter for the industry.
“It is easy for us to forget that the Internet, as a viable advertising medium, is barely four years old, and it is astounding, that in such a relatively short period of time, its growth is now measured in billions of dollars,” said Internet Advertising Bureau chairman Rich LeFurgy. “It is significant to note that Internet advertising has not reached a plateau, and we expect that with online ad budgets increasing for current advertisers, and the growing number of large traditional advertisers who are migrating their advertising to the Internet, we look forward to a sustained period of growth in the years ahead.”
According to the report, which is conducted independently by the New Media Group of PricewaterhouseCoopers for the IAB, the categories which lead online spending during the fourth quarter were consumer-related (29%), computing (20%), financial services (19%), telecom (8%) and new media (7%). The report also found that the overwhelming number of revenue transactions, (93%) continue to be cash-based with barter/trade and packaged deals accounting for 6% and 1% of total revenues respectively. Banner advertisements continue to be reported as the predominate type of advertising, accounting for 56%, with sponsorships (30%), interstitials (5%), email (1%) and other (8%) rounding out the category. Reflecting the continuing growth of e-commerce, hybrid deals accounted for 54% of revenue transactions. with CPMs or impression-based deals at 40% and performance-based deals at 6% of revenues.
“Strong revenue growth led by consumer advertisers, and coupled with seasonality similar to traditional advertising, suggests the Internet is increasingly being factored into advertising budgets, and that the fundamentals are in place for continued industry growth,” said Tom Hyland, Partner and New Media Group Chair, PricewaterhouseCoopers. “The Internet is the only distribution medium which collapses the sales cycle from brand building to closing the sale, a fact increasingly recognized by the marketplace, and underscored by the growth in hybrid pricing schemes,” adds Pete Petrusky, Director, New Media Group, PricewaterhouseCoopers.
The IAB Internet Advertising Revenue Report compiles data reported directly from publishers, making it the industry’s most timely and accurate gauge of online advertising revenue. 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 1200 Web sites. 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.
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 1200 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, the IAB has member countries including Canada, Belgium, 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.