Fourth Quarter Exceeds $1.7 Billion
New York, NY – April 18, 2000 – Eclipsing the growth of television in its first five years as a viable advertising medium, Internet advertising revenues continued their rocket ride in 1999, once again more than doubling reported revenues over the previous year’s growth, ending the year at an impressive $4.62 billion. The Internet Advertising Bureau’s (IAB) Internet Ad Revenue Report, conducted independently by PricewaterhouseCoopers also reported that 1999 online advertising revenue grew 141 per cent over the $1.92 billion reported for 1998, with the fourth quarter growing to $1.7 billion, a 161 per cent increase over the same quarter for 1998.
“Growth measured in billions of dollars is certainly terrific news for the Internet economy. No longer are advertisers and marketers asking why they should advertise online, they are now asking how big a part of their budgets they should devote to online exposure,” said Rich LeFurgy, Chairman of the Internet Advertising Bureau.
According to the report, the categories which lead online spending during the fourth quarter were consumer-related (31%), financial services (17%), computing (16%), new media (12%) and business services (7%). For the full year of 1999 these categories accounted for 30, 19, 19, 6 and 7 per cent respectively. The report also found that the overwhelming number of revenue transactions, (94% Q4, 93% full year) continue to be cash-based with barter/trade and packaged deals accounting for 5% for Q4 (6% full year) and 1% (Q4 and full year) of total revenues. Banner advertisements continue to be reported as the predominate type of advertising, accounting for 53% for Q4, 56% for the full year, sponsorships at 25% for Q4, 27% for the full year, interstitials at 4% Q4 and full year, email 3% Q4, 2% full year, and other rounding out the category at 15% Q4, 11% full year.
Reflecting the continuing strength of e-commerce, hybrid deals accounted for 52% of revenue transactions for Q4, 53% for the year with CPMs or impression-based deals at 40% for both Q4 and the year and performance-based deals at 8% of Q4 revenues, 7% for the full year.
“We are witnessing the rapid expansion of the Internet as an unparalleled advertising and marketing medium,” noted Tom Hyland, Partner and New Media Group Chair, PricewaterhouseCoopers. “Utilizing revenue numbers on an inflation adjusted basis, in this, its fifth year the Internet with $4.6 billion in ad revenue has surpassed the $3.7 billion for television in its first five years, and revenue this year is 47% of that of cable, doubling that percentage from last year.”
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.
PricewaterhouseCoopers (www.pwcglobal.com), the world’s largest professional services organization, helps its clients build value, manage risk and improve their performance. The PricewaterhouseCoopers New Media Group — with offices in New York, Los Angeles, Seattle, San Francisco Bay Area, and Boston — combines content and technology specialists to provide comprehensive service to dynamic entrepreneurial companies. Services include management consulting, business assurance services, ad delivery and privacy attestation and consultation, assistance with mergers and acquisitions, tax planning and compliance, capital structuring and employee benefits and executive compensation packages.
Drawing on the talents of more than 150,000 people in 150 countries, PricewaterhouseCoopers provides a full range of business advisory services to leading global, national and local companies and to public institutions. These services include audit, accounting and tax advice; management, information technology, strategic and human resource consulting; financial advisory services including mergers & acquisitions, business recovery, project finance and litigation support; business process outsourcing services; and legal services through a global network of affiliated law firms.
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, Belgium, France, Germany, Holland, Italy, Switzerland and the United Kingdom, 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.
Marla Nitke IAB