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B2B Marketing

Online Ad Revenues Continue to Set New Highs

Despite the economic morass and significant drops in offline ad spending, big bucks are being spent conducting online campaigns. Since the Interactive Advertising Bureau (IAB) began researching online ad revenue figures in 1996, total U.S. spending has risen from $82 million to $14.9 billion annually.

 

In September, PriceWaterhouseCoopers (PWC) and the IAB released their semiannual report on ad revenues through online channels. It showed that revenues during the first half of 2011 increased 23% over same period 2010 numbers. Total revenues of $14.9 billion were a record for online media channels; since 2009, the rate of growth has nearly doubled.

 

The pace is growing even faster than some analysts predicted. For example, marketing consultancy MagnaGlobal projected in its 2010 online ad revenue report that global revenues would rise at an 11% clip between 2010 and 2015.

 

Supporting these findings is a recently released, collaborative report from eConsultancy and the IAB, which found that nearly 75% of online publishers have seen ad revenues increase during 2011 (this compares to 53% of publishers in 2009). Sixty percent of publishers reported selling inventory through online ad networks, while only 10% reported sales through a private ad exchange arrangement.

 

While most publishers have seen revenue growth through ad sales, they’re not relying on that stream exclusively – 74% have other revenue channels to support their online presence. This may be sound policy because, according to BusinessInsider.com, only five companies control 64% of ad spending over the Web: Google, Yahoo, Microsoft, Facebook and AOL. Together those companies spent $40 billion in 2010.

 

Social network advertising in the U.S. has been steadily increasing as well:  10.8% of total spending in 2011 is expected to be on social media ads (SMA), which is a 3.1% increase over 2010. According to eMarketer, spending for SMAs is expected to total $3 billion this year, and 2012 looks better Р$3.93 billion, accounting for 12.1% of total expenditures.

 

“Strong online advertising growth has continued,” says PWC partner David Silverman. “Fueling this growth is the ability of advertisers to correlate performance and results with dollars they are investing.”

 

The PWC/IAB study showed performance-based pricing structures led the way, contributing 64% ($9.58B) of the total base, followed by impression-based (31%, $4.66B) and hybrid (5%, $686M). Display ad spending increased 27% over 2010, exceeding last year’s increase of 16%. Digital video spending grew over 42% to close around $891 million through the first half of this year.

 

“The remarkably resilient performance of interactive advertising‚Ķdemonstrates that more marketers are placing big bets on digital to tell their brand stories,” Randall Rothenberg, IAB’s president and CEO said following the report release. “This welcome news, in light of the weakness in a large part of the rest of the U.S. economy, confirms that the innovations happening in interactive marketing deliver great value to the industry and to the consumer.”

 

Revenue expectations look even brighter going forward. MagnaGlobal projected in its report that global spending is expected to be nearly $103 billion in 2015.

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Adam Vandergang

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