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Internet Advertising Bureau Announces Second Quarter Advertising Revenue Reporting Program Results

Q2 1997 Spending Reaches $214.4 Million

New York, NY – October 7, 1997 – The Internet Advertising Bureau (IAB) today announced the second quarter 1997 results of its “Advertising Revenue Reporting Program,” with second quarter spending reaching $214.4 million bringing the total revenue for first half of 1997 to $343.9 million — a 322 percent increase from the first half of 1996. The survey also found that ad revenue for consumer-related products reached 30 percent of the total — a new record — and noted a significant shift of revenue toward ad sponsorships.

The first half of 1997 total already exceeds the full 1996 year total of $267 million. On a year-to-year basis, 1997 Q2 revenues rose $162 million or 313 percent, with monthly totals reaching $53 million in April, $70 million in May, and $91 million in June.

The survey also found that more than 86 percent of respondents consider CPM (cost per thousand) as the most effective pricing model for Internet advertising.

“These figures demonstrate that there is a growing level of confidence in the Internet as a mainstream marketing vehicle,” said Rich LeFurgy, Chairman of the IAB and Senior Vice President of Advertising for ESPN/ABCNews Internet Ventures. “With a high concentration of advertising spending in the third and fourth quarters, we believe that the year-end totals will be very strong.

“Combined with the recent results of the IAB’s consumer research that reports the communications impact of banner advertising, this is a powerful signal of the Internet’s emergence as a full-fledged advertising vehicle,” LeFurgy added.

Five leading industry categories continued to dominate Internet advertising during Q2 1997. The largest categories were: consumer-related (30 percent), financial services (22 percent), computing products (21 percent), new media (7 percent) and telecommunications (7 percent). In Q1 1997, only 17 percent of spending was allocated to consumer products.

While banners remain the predominant ad vehicle, the survey found that sponsorship of online content increased notably, capturing 41 percent of the total revenues. Banner advertising accounted for 54 percent of the total. The report also showed that advertising transactions continue to be on a cash- basis with barter and trade accounting for four percent of total revenues.

The Internet 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 online — rather than projections or estimates. The survey is the most inclusive report of online ad spending, capturing data from 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 90 percent of industry revenues reporting directly to the program. Advertising revenue across the balance of the industry are conservative estimates derived from public information sources.

“As the survey enters its second year, we’ve seen a very high level of participation. The IAB report provides a true industry benchmark on the revenue growth of the online advertising industry,” said Tom Hyland, Chairman of Coopers & Lybrand’s New Media Group.

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 Internet Advertising Bureau was formed in 1996 to promote online advertising. General membership includes companies that are actively engaged in the sales of Internet advertising, with associate membership including ad agencies, measurement companies, research suppliers, technology suppliers, traffic companies and other organizations from related industries.

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