Interactive Advertising Bureau Reports Continued Growth in Online Advertising

Interactive Advertising Bureau (IAB) released first half of 2006 internet ad revenues, and the numbers continue to rise. Below is a chart comparing year-over-year growth rates by ad channel:



Overally, internet advertising revenue grew 36.69% YoY, with revenue exceeding $4B for the first time in a single quarter in Q2. There are a confluence of factors at play here: consumers are spending more time on the internet, traditional media outlets no longer have the reach they once had, and the overall tivo effect of increased adoption of DVRs. Internet advertising also enables marketers to measure the impact of their ad dollars unimaginable in a few years ago which traditional media simply can't replicate. This is evident in where advertisers are spending their internet dollars:



Search has the biggest share of the pie underscoring the effectiveness of keyword bidding in driving qualifying traffic to online businesses. However, the largest percentage growths are in lead generation and classified ads, indicating that local advertising on the internet is quickly emerging. I suspect Craiglists is having a very good year, and we'll see more competition in online classifieds over the next year.

Although marketers are definitely spending the majority of their online ad dollars in direct response channels, the increased spend in display advertising suggests that marketers still value branded advertising in a medium perfect for direct response. This is good news for the major portals, especially for AOL who's betting their future on online advertising.

technorati tags: advertising, IAB