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Internet Advertising Bureau (IAB) Announces Second Quarter 1998 Advertising Revenue Reporting Program

Q2 1998 Ad Spending Climbs to $ 423 Million Increases 97 Per Cent Over Q2 1997

Industry Continues Its Billion Dollar Run Rate as Internet Advertising Grows For Ninth Consecutive Quarter

New York, October 28, 1998 – The Internet Advertising Bureau (IAB) today announced second quarter 1998 results of its industry-leading “Advertising Revenue Reporting Program,” with total second quarter spending reaching $423 million, an increase of 97 per cent over the second quarter 1997 and the ninth consecutive quarter of reported revenue growth. According to the report, which was presented by PricewaterhouseCoopers at the IAB’s annual membership meeting in New York City at the @d:tech New York Forum, Internet advertising continues its billion dollar run-rate for the third consecutive quarter, and continues to trend towards a traditional media model, with computer and consumer-related advertising leading the way.

“The continuing growth of online advertising revenue only reaffirms the vitality of the medium as an increasingly important component for advertisers’ campaigns,” said IAB Chairman Rich LeFurgy. “We are seeing increasing numbers of large advertisers integrate online spending into their overall media plans, which is a significant boost for the medium. Additionally, the industry is experiencing a surge of interest from all quarters – agencies, advertisers, publishers, technology enablers and research companies – all geared toward improving the performance of online advertising for the mutual benefit of all.”

The categories which lead online spending during the second quarter were computing (26%), consumer-related (24%), financial services (13%), new media (13%) and telecom (9%). The survey also found that the overwhelming number of revenue transactions, (95%) continue to be cash-based with barter deals accounting for (5%) of total spending. Banner advertisements continue to dominate spending in the category (58%) with sponsorships (37%), interstitials (3%) and others (2%) rounding out the category. Reflecting the growth of e-commerce, hybrid ads account for 56% of transactions, with CPMs at 40% and performance-based at 4%.

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.

“With the ninth consecutive quarter of growth behind us, we are confident that the Internet has taken its place as a significant advertising medium, especially as an increasing number of major advertisers come into the mix,” noted Tom Hyland, Chair, PricewaterhouseCoopers New Media Group.

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, France and Germany, 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.

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