Web advertising revenue hit a record quarterly high, surpassing $3 billion from July-August 2005, according to figures released by the Internet Advertising Bureau (IAB). This puts spending on Internet ads on a pace to exceed $12 billion this calendar year.
The bullish third quarter performance represents a nearly 34 percent increase over the revenue generated during the same three-month period in ’04. Data was compiled by the accounting firm PricewaterhouseCoopers.
The Internet ad market is indeed booming, to the point where client dollars are being diverted from traditional media. Per some interpretations, this trend was reflected in the recently released American Association of Advertising Agencies’ (AAAA) annual Television Production Cost Survey (SHOOT, 12/2, p. 1).
The latest AAAA study, which covers calendar year 2004 as reported by 20 participating ad agencies and branch offices (including most of the country’s top 20 shops), shows a total pool of 1,579 national commercials–that’s 58 more spots than in 2003 based on returns from 19 agencies.
However when looking over the past four years, the tally of national commercials being produced, as reported in the study, is steadily declining. In 2001, per the AAAA survey, there were 1,741 TV spots. In ’02, the total was 1,725. When ’03 came in at 1,521 spots, there was conjecture that advertisers from some product categories might have started up their activity later in calendar year ’03 and continued it into ’04. It was too early, said some, to pinpoint a trend–the ’04 numbers would be more telling. Now that this tally is in and for the second consecutive year the total pool is in the 1,500-plus range, it’s reasonable to conclude, said David Perry, chairman of the AAAA broadcast production committee, that clients are indeed shifting some of their TV investments into alternative media.
Perry, who is also executive VP/head of broadcast production at Saatchi & Saatchi, New York, said the pattern of decline is becoming clear. He pulled out results of the AAAA report covering ’94 in which there were 1,958 national commercials reported by study participants. In ’95, there were 1,932. Perry noted that over the past decade, the total number of national commercials in the annual AAAA study database has plummeted some 19.3 percent.
“Ten years ago, there was concern voiced over declining TV viewership,” related Perry. “But back then, alternative new media weren’t mature enough to siphon off a significant amount of business. Now that’s no longer the case.” Perry specifically cited Internet advertising, and product placement in TV programs and theatrical features as media gaining momentum.
