NEW YORK: Online advertising generated $16.9bn in revenues for the year 2006, indicating a 35 percent year-on-year growth compared with 2005, a report revealed yesterday.
The Interactive Advertising Bureau (IAB) along with PricewaterhouseCoopers LLP released its report on the total adspend for last year. A highlight of the report is the fourth quarter adspend which had also surged 35 percent y-o-y to reach a record high of $4.8bn.
The figures have further established the medium's power to drive markets. According to IAB chief Randall Rothenberg, advertisers have recognized the medium's ability to “uniquely affect consumer behavior from product awareness, to purchase intent, to actual purchase and then brand loyalty”.
Improvement in Web advertising quality, greater publisher transparency, increasing usage of video and innovative interactive advertising have yielded huge revenues, the IAB report said. Details indicate 22 percent growth in display advertising amounting to $5.4bn and 40 percent growth in search advertising contributing $6.8bn to revenues. The biggest chunk of Internet adspend was by consumer goods marketers generating 52 percent of revenues. Within this category, retail provided the biggest slice of 47 percent, followed by 22 percent from automotive 13 percent from leisure services. Entertainment and packaged goods accounted for 8 percent. Ads from financial service providers contributed 16 percent while 10 percent came from computer advertisers.
The growth trend is expected to be maintained and even bettered, IAB believes “as marketers allocate more of their total marketing dollars to interactive and the industry delivers effective and innovative platforms for connecting with consumers."
Despite the record growth, the IAB said it still believes the medium is under-utilized. Senior VP Sheryl Draizen said “online advertising deserves a bigger slice of companies' overall marketing budgets”. The figures in the IAB report indicate that online advertising was a mere 5.9 percent of total US advertising revenues in 2006, which is “disproportionately low if you look at the total Internet audience and the amount of time people stay online” she said.
The IAB was founded in 1996 and represents more than 300 interactive advertising companies.
