Online Ad Revenue Eclipses $3 Billion in Q3

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Internet advertising revenue jumped 33.9 percent to $3.1 billion in the third quarter of 2005, giving rise to expectations that the run rate for the year might cross a record $12 billion.

The estimate from the Interactive Advertising Bureau and its research partner, PricewaterhouseCoopers' New Media Group, confirms one record: This was the highest quarter reported, and the first time that quarterly revenue crossed $3 billion.

"I think that success begets success," said Greg Stuart, president/CEO of the IAB, New York. "My experience with direct advertisers is when they find something that works, they'll find more money to put in it."

The IAB/PwC estimate did not break out online ad revenue by vehicle. That division is reserved for its half-yearly reports coinciding with the second and fourth-quarter estimates.

In the latest report, the third-quarter estimate was 4.7 percent higher than the second quarter's $2.9 billion. This is despite the month of August, which is traditionally sluggish for advertising.

Overall, IAB and PwC anticipate that online ad revenue for 2005 will jump more than 20 percent from last year's $9.6 billion. Such growth is fueled by the Internet's ability to shrink the business cycle for advertising, marketing and branding. Traditional advertisers now see virtue in this, moving dollars away from other ad channels.

But Stuart confirms that this increase in online ad revenue is not incremental -- at least, not now.

"It's got to be taking money away from other channels at this point," he said. "If the [overall advertising] industry's growing 6 percent to 7 percent and the online category's growing 25 percent to 30 percent, then you've got to be taking share."

Mickey Alam Khan covers Internet marketing campaigns and e-commerce, agency news as well as circulation for DM News and To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting

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