IAB: Online Ad Revenue Declined 8 Percent in First Half

Internet advertising in the United States for the first half of the year totaled $3.76 billion, down 7.8 percent from a year earlier, according to the Interactive Advertising Bureau.

It attributed the decline to softness in the overall advertising market and the weak economy.

The IAB's most recent Internet Ad Revenue Report, conducted with the New Media Group of PricewaterhouseCoopers, said that in the first quarter of the year, online advertising was $1.89 billion. Ad revenue fell slightly in the second quarter to $1.87 billion.

Banner ads remained the most popular form of online advertising, accounting for 36 percent of the overall revenue, though down substantially from 51 percent in 2000. Sponsorships rose slightly to 28 percent in the first half, from 27 percent a year ago. Interstitials remained unchanged at 3 percent, keyword searches rose to 3 percent from 1 percent last year, and rich media remained unchanged at 2 percent. The IAB also said e-mail remained unchanged at 3 percent.

“While the declines are not insignificant, they are well within the parameters of the overall advertising industry's experience and seen in perspective, they reflect our confidence in the long-term value of the online medium,” said Robin Webster, the IAB's president/CEO.

The IAB survey also found that cost per thousand remains the dominant pricing model in the industry, accounting for 50 percent of all deals in the first half of the year, up from 43 percent a year ago. Straight performance contracts remained flat in the first half at 10 percent.

“This is a healthy trend for the industry,” Webster said. “Pricing models based on variables publishers control such as audience, space and editorial environment are much more reliable than those which are outside the publisher's control, such as strength of the agency's creative and/or the advertiser's service or product.”

During the first half of the year, 90 percent of the revenue transactions were cash-based, the IAB said, down from 94 percent a year ago. Package deals remained unchanged at 1 percent.

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