Online advertising revenues break records

25 May 2004

Internet advertising revenues reached almost US$2.3bn for the first quarter of this year – the highest three-monthly total since records began eight years ago.

The estimates represent a 38.9pc increase on the same quarter one year ago, according to information compiled on behalf of the Internet Advertising Bureau (IAB) by PricewaterhouseCoopers (PWC). For the first time ever, the Q1 revenues also beat ad spending in the fourth quarter 2003, which is generally considered the most strongest period in the year for ad sales in all media.

The first-quarter online ad revenue figure was estimated by surveying and aggregating 2004 first-quarter data from the top 15 online ad sellers. The results were then extrapolated to calculate the total estimated industry revenue figure. Actual first quarter results will be reported along with actual second quarter revenues in July.

Conducted by the New Media Group of PricewaterhouseCoopers, the “Advertising Revenue Report” was started by the IAB in 1996. It represents data from all companies that report meaningful online advertising revenues. It is claimed that the results are the most accurate measurement of interactive advertising revenues because the data is compiled directly from information supplied by companies selling advertising on the internet. 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.

Commenting on the results, Tom Hyland, partner and chairman of PWC’s New Media Group, said: “All through 2003 we published positive revenue results for internet advertising and the trend continued through the first quarter of 2004. The business fundamentals remain solid, the technology infrastructure is advancing at a rapid pace and marketers are continuing to use the Internet for all types of marketing and promotion.”

Greg Stuart, president and CEO of the Internet Advertising Bureau, added: “Clearly, we’re thrilled with the numbers. However, they are just one side of an enormously compelling story. The last two years have offered marketers the opportunity to collect research and data that proves, beyond a shadow of a doubt, internet advertising accomplishes key marketing goals as well, if not better, than any other ad medium. The proof is in the results.”

Optimism in the sector appears to be reflected elsewhere. In the US, eMarketer has forecast that online ad sales will reach US$8.4bn for 2004, a rise of more than 15pc from last year, and higher than the 2000 peak of $8.1bn.

By Gordon Smith