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Internet Advertising Bureau Announces First Quarter Advertising Revenue Reporting Program Results

Q1 Ad Spending Hits $129.5 Million Outpacing Q4 Revenues

SAN FRANCISCO, CA – June 12, 1997 – The Internet Advertising Bureau (IAB) today announced the first quarter 1997 results of its Advertising Revenue Reporting Program: with total first quarter spending reaching $129.5 million. According to the report, online advertising spending continues to grow at a rapid pace, exceeding record-setting Q4 1996 revenues by more than $20 million or 18 percent. Total spending in Q1 1997 is up 333 percent from Q1 1996, which saw online ad spending top off at just under $30 million.

Five leading industry categories dominated Internet advertising spending during Q1 1997. The largest categories were: computing products (30%), telecommunications (22%), consumer-related (17%), financial services (11%) and new media (10%). Telecommunications industry spending increased 13 percent in Q1 and the financial services industry joined the top five online spenders for the first time. The survey also found that the vast majority of revenue transactions continue to be cash-based with barter deals accounting for only three percent of total spending. And while banner advertising still dominated online spending at 70 percent, the survey found that a full 24 percent of online ad dollars was dedicated to sponsorship of online content.

In another significant finding, the survey found that online advertising revenue is being spread more evenly across the top 50 online publishers. In the first quarter of 1996 almost 75 percent of all online revenue was generated by the top ten online publishers. In Q1 1997 the top ten online publishers accounted for just 63 percent of advertising revenues.

“Media spending is traditionally soft in the first quarter, so these are particularly significant results,” said Rich LeFurgy, IAB chairman and senior vice president of advertising, ESPN/ABC Internet Ventures. “Acceptance of the medium is clearly growing among advertisers and more and more publishers now view advertising as the revenue model of choice.”

The Advertising Revenue Reporting Program, which is administered by Coopers & Lybrand L.L.P.’s New Media Group, is compiled from data collected directly from companies engaged in selling advertising on the Internet — rather than projections or estimates. The survey is the most inclusive report of online ad spending, including all forms of Internet publishing including Web sites, commercial online services, off-line delivery services and e-mail.

The latest round of the survey represented data from more than 200 Internet publishers, representing more than 86% of industry revenues reporting directly to the program. Advertising spending across the balance of the industry are conservative estimates derived from public information sources.

“There has been a great deal of guesswork and speculation about the size of online advertising spending,” said Tom Hyland, chairman, Coopers & Lybrand L.L.P.’s New Media Group. “This program eliminates much of the guesswork and provides the most accurate measurement of online ad spending by using actual sales data provided by online publishers.”

Under the program, all data provided to Coopers & Lybrand is strictly confidential and is only reported in aggregate form. No individual online advertisers are identified. IAB members and survey participants receive a detailed report of the quarterly findings shortly after the release of the top-line data.

The survey also asked respondents for their revenue forecasts and views on industry issues. Forty-five percent of respondents predicted 1997 revenues will fall between $500-$600 million and 17 percent anticipate 1997 revenues will exceed $700 million. Asked what was the most critical issue to online advertising growth, 31 percent said accurate audience measurement and an additional 31 percent cited a larger installed audience base. Only 10 percent believed that increased bandwidth was a critical issue.

Founded in 1996, the IAB is dedicated to promoting the use and effectiveness of online advertising and helping advertisers and their agencies maximize the value of online marketing initiatives. IAB activities designed to foster the growth of online advertising include evaluation and recommendation of standards and practices for Internet advertising; sponsorship of research to document the effectiveness of the online medium; and the Internet Advertising Revenue Reporting Program.

Currently, the IAB represents 200 member companies including leading web sites and online services and the organizations that actively support advertising sales activities such as measurement companies, research suppliers, traffic companies, and technology and service providers.

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