IAB/PwC: Internet Ad Revenues Reach Record-High $23 Billion in '08

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Includes: AABA, GOOG, IAC, MSFT, TWX
by: Marketing Charts

Internet advertising revenues in the US remain strong, with Q408 revenues hitting $6.1 billion, and revenues for the year topping $23 billion, according to the 2008 Internet Advertising Revenue Report from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC).

Despite a difficult US economy, the report indicates that interactive advertising’s continued growth - though at a slower pace - confirms marketers’ increased confidence in the value in reaching consumers online.

Key report highlights:

  • Full-year 2008 revenues totaled a record $23.4 billion, exceeding 2007’s performance ($21.2 billion), by $2.2 billion, or 10.6%.
  • Q408 revenues of $6.1 billion mark the first time the interactive advertising industry achieved, and surpassed, $6 billion in a single quarter. The figures represent a 4.5% increase from Q308 total of $5.8 billion and a 2.6% increase from 2007’s fourth quarter, which had revenues of $5.9 billion.
  • This is the fifth consecutive year of record results.

Search Drives Revenue Growth

Search remains the main driver of revenue growth according to the report, showing a 19.8% increase over 2007. display banner advertising, the second largest format, accounted for 21%, followed by classifieds (13%), lead generation (7%) and rich media (7%) of 2008 Q4 revenues.

Digital video, though still a small overall contributor, more than doubled its revenue with an increase to $734 million from $324 million in 2007, indicating that marketers and consumers are embracing the platform.

CPG Share of Internet Ad Revenues Up 60%

As in 2007, retail, financial services, computing and automotive remained the four largest verticals among internet advertisers in 2008. Consumer packaged goods, an industry vertical historically slow to embrace interactive advertising, notably increased its share of total internet ad revenues by 60% over 2007. The internet is now the third largest ad-supported medium, behind newspapers and TV.

“We are seeing an ongoing secular shift from traditional to online media as marketers recognize that ad dollars invested in interactive media are effective at influencing consumers and delivering measurable results,” said Randall Rothenberg, president and CEO of the IAB. “In this uncertain economy, where marketers know they need to do more with less, interactive advertising provides the tools for them to build deep, engaging relationships with consumers - the experience marketers gain from this will deliver dividends especially after the economy turns around.”

“Though some categories in the fourth quarter slowed or even dipped, reflecting the current economic challenges, the overall performance is up, confirming interactive’s ever-growing importance to the successful marketing mix,” said David Silverman, partner, assurance, PricewaterhouseCoopers.

About the research: The Internet Advertising Revenue Report (pdf) was launched in 1996 by the IAB, and is conducted by the New Media Group of PwC. The report aggregates data from all companies that report meaningful online advertising revenue and includes data concerning online advertising revenues from Web sites, commercial online services, ad networks, free e-mail providers, and all other companies selling online advertising. Q1 and Q3 quarter revenue reports are estimates, with the actual figures being released along with Q2 and Q4 data respectively.

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