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IAB/PwC RELEASE FULL-YEAR 2004 INTERNET AD REVENUE FIGURES

INTERACTIVE ADVERTISING REVENUES GROW NEARLY 33% AS 2004 TOTALS $9.6 BILLION

Fourth Quarter of 2004 Marks the Highest Ever Quarter of Revenue Reported

New York, NY (April 28, 2005) The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) today released the Internet Advertising Revenue Report including final numbers for Q3, Q4 and full-year 2004. The 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 $9.6 billion and exceeded the previous revenue record in 2000 by nearly 20 percent. Q4 2004 revenues totaled a record $2.69 billion, marking the highest quarter ever reported.

“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.”

The IAB sponsors the Internet Advertising Revenue Report, which is conducted independently by the New Media Group of PwC. The full report is issued twice yearly for full and half-year data, and top-line quarterly figures are issued for the first and third quarters.

This year’s report contains breakouts detailing the performance of particular industry categories:

Ad Formats – Internet ad revenues broken down by ad formats for the 2004 full year revenue are:

2004 (Ttl = $9,626M) 2003 (Ttl = $7,267M)
Type of Advertising $ % share of market $ % share of market
Display Advertising 1,829 19% 1,526 21%
Sponsorship 770 8% 727 10%
Slotting Fees 193 2% 218 3%
Rich Media 963 10% 727 10%
All Display 3,754 39% 3,197 44%
Search 3,850 40% 2,543 35%
Classifieds 1,733 18% 1,235 17%
E-mail 96 1% 218 3%
Referrals 193 2% 73 1%

 

Ad Categories – In 2004, consumer advertisers continued to lead the way in online advertising spending accounting for 49% of total revenues. The top five in this segment are:

2004 2003
Consumer 49% 37%
Computing 18% 20%
Financial Services 17% 12%
Pharma & Healthcare 6% 4%
Telecom 4% 4%

Pricing Models – While CPM pricing continues to be the predominant choice for buyers and sellers, growth in performance-based deals continued in 2004.

2004 2003
CPM/Impression 42% 43%
Performance-based 41% 37%
Hybrid 17% 20%

Conducted by the New Media Group of PricewaterhouseCoopers the “Advertising Revenue Report” was started by the IAB in 1996, and represents data from all companies that report meaningful online advertising revenues. The results are the most accurate measurement of interactive advertising revenues because the data is compiled directly from information supplied by companies selling advertising on the Internet. 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. First and third quarter revenue reports are estimates, with the actual figures being released along with second and fourth quarter data respectively.
About PricewaterhouseCoopers:
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services for public and private clients. More than 120,000 people in 144 countries connect their thinking, experience and solutions to build public trust and enhance value for clients and their stakeholders.

Unless otherwise indicated, “PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership. PricewaterhouseCoopers LLP is a member firm of PricewaterhouseCoopers International Limited.
About the IAB:
Founded in 1996, the Interactive Advertising Bureau (IAB) represents over 200 leading interactive companies that are actively engaged in, and support the sale of interactive advertising. IAB members are responsible for selling over 86% of online advertising in the United States. On behalf of its members, the IAB evaluates and recommends standards and practices, fields interactive effectiveness research and educates the advertising industry regarding the use of interactive advertising. For more information, please visit www.iab.com.