February 12, 2004, 12:00 AM

Online ad spending in 2003 rises 20% to $7.2 billion, outpacing other media

Leading all other advertising channels in rate of growth, U.S. online advertising revenue rose 20% last year to $7.2 billion, the IAB and PwC report. Q4 spending rose 38% to $2.2 billion.

Leading all other advertising channels in rate of growth, U.S. online advertising revenue last year rose 20% to $7.2 billion, up from $6 billion in 2002, the Interactive Advertising Bureau and consultants PricewaterhouseCoopers reported today. Q4 spending set a new record at $2.2 billion, a year-to-year rise of 38%.

“I’m not at all surprised at these revenue numbers,” says Greg Stuart, president and CEO of the IAB. “Not exactly a secret weapon any longer, our medium continues to lead where others have fallen off, and smart marketers know it, and are shifting dollars and gaining share.”

The ad revenue figures are included in the latest Advertising Revenue Report, which PwC produces on behalf of the IAB. The report cites estimates from global advertising firm Universal McCann that say the Internet led all other advertising channels in percentage revenue growth last year.

A separate study by market research firm eMarketer Inc., which bases its findings on the numbers from the IAB report, notes that paid Internet search was the biggest driver of the increase in online advertising (see InternetRetailer.com, 2/11/04). EMarketer notes that spending on rich media advertising rose 23%, while spending on banner ads dropped about 22%.

“The online medium continues to demonstrate its vitality in any number of ways,” says Tom Hyland, partner and chair of PwC’s New Media Group, which conducted the IAB report. “The consistent revenue growth signals in part the increased adoption of broadband. Combined with the evolution of emerging ad formats including search, the growing health of the online medium and its proven advertising effectiveness bode well for sustainable revenue growth.”

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