- Friday, Jun. 4, 2004
The tail end of last year gave online advertising its best quarter ever and signaled a rebound in a sector that many marketers had been skeptical of since the Internet economy began to unravel four years ago.
Online advertising revenue reached $2.18 billion in fourth-quarter 2003, surpassing the previous high that was generated in fourth-quarter 2000, according to just-released figures from the Interactive Advertising Bureau, New York, and PricewaterhouseCoopers.
For the year, $7.27 billion in online ads were sold, second only to 2000, when the Internet economy was at its apex. That year saw $8.09 billion in online ad sales, though the number declined 12 percent in 2001 and an additional 16 percent in 2002.
Last year's reversal of declining Internet ad dollars, therefore, puts an end to the bear market in the sector, experts said.
"The consensus is that online advertising has rebounded," said Pete Petrusky, director of new media at PricewaterhouseCoopers. "History shows that advertising ultimately follows the audience. More people are getting online, and they're spending more time online."
"Very clearly, the bad news is over in the online ad category," Interactive Advertising Bureau CEO Greg Stuart said.
According to the report, last year marked the ninth anniversary of the Internet as an advertising medium, and the $7.267 billion it garnered in ad revenue far exceeds the $2.495 billion, adjusted for inflation, earned in ad revenue by the cable TV industry in its ninth year, which the report puts at '88. Broadcast TV, though, still outranked the Internet, generating $8.188 billion, adjusted for inflation, in '57, nine years after it premiered as a commercial medium.
The banner was supplanted by the keyword search as the dominant format of online advertising. About 35 percent of online ad revenue last year went to keyword searches, up from 15 percent the year earlier, while banner ads fell to 21 percent from 29 percent.
Internet advertising's revenue last year puts it seventh—behind magazines at $12.4 billion—on the report's list of advertising markets. Direct mail leads with $49 billion, followed by newspapers ($45.5 billion), broadcast TV ($43.3 billion), radio ($19.5 billion) and cable TV ($18.3 billion).
Paul Bond is new media/technology editor of The Hollywood Reporter, a sister publication to SHOOT.