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Internet Advertising Bureau Announces Third Quarter Advertising Revenue Reporting Program Results

Year-to-Date 1997 Spending Reaches $571 Million

NEW YORK, NY – December 11, 1997 – The Internet Advertising Bureau (IAB) today announced the third quarter results of its “Advertising Revenue Reporting Program,” which indicates that ad revenues reached $571 million for the first nine months of the year, a 263 percent increase over the first three quarters of 1996. Third quarter revenue reached $227.1 million, up six percent over the second quarter and a 200 percent increase over the comparable year-ago quarter.

According to the survey, advertiser revenue increased by $413.6 million in the first nine months of 1997 over the comparable period last year, reflecting the growing acceptance of the medium. The survey also found that spending by consumer-related advertisers reached 32 percent of the total for the quarter — a new record. The other leading categories were: computing products (22 percent), financial services (20 percent), new media (7 percent) and telecommunications (6 percent).

According to the report, which is based on data submitted by leading Internet and consumer online companies and sales organizations, national advertisers accounted for 88 percent of the total with local advertisers contributing 12 percent. Revenues were broken out by content genre for the first time with search engines capturing 55 percent of the revenue total. The other leading genre categories by revenue share were: technology (21 percent), news & information (8 percent), sports (5 percent) and entertainment (3 percent).

The survey also found the ratio between banner advertising and other forms constant at 54 percent banner advertising, 41 percent content sponsorship, two percent interstitials and three percent other forms including microsites.

In a forecast of fourth quarter performance, survey respondents indicated that 70 percent of inventory for that period was sold out as of the mid- November survey deadline. Additionally, 74 percent of respondents predicted a rise in ad rates in the next 12 months, with only six percent forecasting a decline. Twenty percent predicted that rates would be constant.

Commenting on the report, Rich LeFurgy, IAB chairman and Senior Vice President of Advertising for ABC News/ESPN Internet Ventures, stated: “This is the first time we have seen the effects of seasonality on the industry, similar to traditional media, a factor responsible for the leveling in the pace of quarter-to-quarter growth. However, respondents to the survey indicated that they are very bullish about the outlook for the fourth quarter and next year.”

Tom Hyland, chairman, Coopers & Lybrand New Media Group, which administers the survey, noted “Working with the IAB we’ve expanded the report to offer a comprehensive quarter-to-quarter look at the growth of ad revenues and forces affecting that growth. With the growing amount of direct participation from the leading companies in the industry, we’re confident that we can provide a benchmark that will enable the industry to chart its course accurately.”

The Internet Advertising Revenue Reporting Program 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 advertising spending, capturing data from Web sites, commercial online services, off-line delivery services and e-mail providers.

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 Coopers & Lybrand. Advertising revenue across the balance of the industry are conservative estimates derived from public information sources.

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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