Interactive Advertising Bureau survey indicates that of the total $ 257 Billion domestic advertising revenues:
- Internet advertising revenue was $2.7 B for the 4th Quarter, $9.6 billion for all of 2004.
- Consumer advertising online increased at a fast rate among major industry categories - up from 37% in Q4-2003 to 49% in Q4-2004. The balance of the industry groups were Computing (18%), Financial Services (17%), Pharmaceuticals (6%) and Telecommunications (4%).
- Paid Search (grew from 35% to 40% of revenues or $3.9B) of internet based revenues, Classifieds (approximately 17% held steady at $1.7B) and Display and sponsorship ads (declining percent of total but increasing 15% in dollar terms to $2.6B) were major revenue sources. Rich media approached $1B in revenues while slotting fees (2%), e-mail (1%) and referrals (2%) combined declined to about $480 M from 2003's total of $510 M.
- Top 10 ad-selling companies account for over 70% of total online industry revenues, top 50 firms account for almost 95%.
- Performance pricing is used by 46% of internet advertisers, up significantly year over year while CPM (impression based) and hybrid models declined slightly to 38% and 16% of totals respectively.
- Employment listings accounted for 47% of online classified advertising; auction listing for 34%, yellow pages for 7%, real estate at 6% and automotive for 6%.
- National advertisers represent 94% of the total online advertisers.
- Online, retail advertising is 40% of total, Automotive 19%, Leisure 16%, Entertainment 13% and packaged goods 7%.
- As a comparison with prior broadcast technologies, internet advertising revenues surpassed revenue from cable television (in its 3rd year) and surpassed broadcast television (in its 10th year). At this time, the leading advertiser methods are direct mail ($50.1 B), Newspapers ($46.2 B), Syndicated and Broadcast TV ($33.5 B), Radio ($20.7 B) and Cable ($15.8 B)
For the first half of its web-enabled life, the Internet as an advertising venue was dismissed by advertisers and agencies as online advertising revenues trailed even billboards. Combine the poor revenue prospects with the click through measurement debacles, minuscule rates per impression, limited demographic appeal, bandwidth and technology limitations, rich media which described the cost of producing same not the impact and the non-traditional approach to budgets and schedules which made dealing with the web-savvy difficult at best. The internet was considered a novelty venue best left to the geeks so computers, software and tech toys dominated the ad base. And the possibility of advertising revenues from 'search activities' was not even imagined. A lot has changed in 10 years and for most of those years, IAB has been watching and reporting on the growth of online advertising.
The recently published Interactive Advertising Bureau sponsored survey conducted by PriceWaterhouseCoopers indicates that Internet advertising is not only coming into its own, but is rapidly becoming a venue with considerable clout. No longer trailing billboards, revenues for online advertising will likely surpass consumer magazine advertising revenues if not this year then certainly next. With declines in TV watching, newspaper reading, radio listening and increases in online viewing, reading and listening habits online advertising can be expected to grow 30-35% per year while traditional venues will hold or retreat as declining audience/subscriber numbers overwhelm small increases in advertising rates.
The whole report is available here: IAB Internet Advertising Report and it provides sufficient detail to convince both advertisers and their agencies that the venue for growth is online. And once there, advertisers will find a broader array of models and interactive technologies that can be employed in brand building, advertising, marketing, promotion, customer communications and support. And agencies will gravitate toward producing a far richer experience than unicast or broadcast communications can provide.
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