May 16, 2008, 12:00 AM

Internet advertising rises 26% in 2007 to $21.2 billion

Spending on Internet advertising set a new high for the fourth consecutive year in 2007, rising 26% to $21.2 billion, the Interactive Advertising Bureau reports.

Katie Evans

Managing Editor, International Research

Spending on Internet advertising set a new high for the fourth consecutive year in 2007, rising 26% to $21.2 billion, the Interactive Advertising Bureau says in its 2007 Internet Advertising Revenue Report.

Business-to-consumer advertisers continued to account for the largest group of Internet ad spending, at 55%, up from 52% in 2006, the advertising bureau says.

For the fourth quarter of 2007, spending on Internet ads rose 24% year-over-year to $5.9 billion. That marked the 13th consecutive quarter of record spending, the bureau says.

The report, conducted for the Internet Advertising Bureau by accountants PricewaterhouseCoopers, also notes that Internet search advertising, display ads, classified ads and lead-generation all contributed to the growth in Internet ad spending.

The report also showed a slight shift toward performance-based advertising, which accounted for 51% of Internet ads last year, up from 47% in 2006, as cost-per-thousand or cost-per-impression ads fell to 45% from 48%, and advertising that combines both models dipped to 4% from 5%.

Following are the spending volumes (in millions) by category of Internet advertising for 2007, followed by category market share in 2007, and spending (in millions) and market share for 2006:
Display ads, $4,455; 21%; $3,685; 22%
Sponsorships, $636; 3%; $496; 3%
Rich media (including broadband video in ’06), $1,657; 8%; $1,192; 7%
Digital video (’07 only) $324; 2%
Keyword search, $8,805; 41%; $6,799; 40%
Classifieds, $3,321; 16%; $3,059; 18%
E-mail, $424; 2%; $338; 2%
Lead generation, $1,584; 7%; $1,310; 8%

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