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Internet Advertising Revenues Exceed $ 1 Billion For the First Time

Third Quarter 1998 Climbs to Nearly $500 Million

1998 On Track For $2 Billion In Online Ad Revenues

Industry At Billion Dollar Plus Run Rate As Online Advertising Continues Its Upward Spiral For Tenth Consecutive Quarter

New York, February 9, 1999 – For the first time, Internet advertising revenue has exceeded one billion dollars within the same calendar year, totaling $1.3 billion through the nine months ended September 1998. Third quarter 1998 Internet advertising revenues climbed to $491 million, an increase of 116% over the same quarter for 1997, the tenth consecutive record-setting quarter for the industry. The IAB Ad Revenue Report compiles data reported directly from publishers, making it the industry’s most timely and accurate gauge of online advertising revenue. Based on the first three quarter total of $1.3 billion reported for 1998, coupled with historical seasonal revenue patterns, 1998 is approaching a $2 billion run-rate.

According to the report, which is conducted by the New Media Group of PricewaterhouseCoopers for the IAB, the categories which lead online spending during the third quarter were consumer-related (27%), computing (24%), financial services (16%), telecom (11%) and new media (7%). The report also found that the overwhelming number of revenue transactions, (94%) continue to be cash-based with barter/trade and packaged deals accounting for 5% and 1% of total revenues respectively. Banner advertisements continue to be reported as the predominate type of advertising, accounting for 53%, with sponsorships (30%), interstitials (6%0 and other (11%0 rounding out the category. Reflecting the growth of e-commerce, hybrid deals accounted for 52% of revenue transactions. with CPMs or impression-based deals at 43% and performance-based deals at 5% of revenues.

Commenting on the report, IAB Chairman Rich LeFurgy noted, “This report is the biggest endorsement yet from the marketing and advertising communities that online advertising is here to stay as an integral component of their marketing and branding plans. The industry continues to grow, and show strength as it does. Even in a traditionally weak third quarter, we have seen a significant bounce in revenue growth. Larger percentage increases on larger numbers attest to the robustness of our medium. The industry continues to break records, quarter after quarter indicating that more and more traditional advertisers are experiencing the effectiveness of online advertising…in a word, it works.”

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.

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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