November 11, 2003, 12:00 AM

It’s back: online ad sending up 10.5% to $3.3 billion for the first half

Consumer brand advertising leads the way, accounting for 35% of online advertising with 44% of that from retailers. Spending on paid search soars to 31% of Q2 online ad revenue from just 9% a year ago as marketers demand more accountability.


Driven in large measure by consumer brand advertisers in general, retail in particular, and growing interest among all online advertisers in performance-based programs, online advertising spending for the first six months of 2003 was nearly $3.3 billion, up 10.5% over the same period last year, according to a report by the Internet Advertising Bureau.

The quarterly survey, conducted by PricewaterhouseCoopers, showed that first-quarter ad spending totaled $1.63 billion, up 7% from the year-ago quarter; and second-quarter spending at $1.66 billion was up 13.9% over Q2 2002. After seven consecutive quarters of quarterly decline in online advertising that ended with the third quarter 2002, this year’s second quarter marks the third consecutive quarterly increase in spending.

“Year-to-date revenue results are an affirmation that this is a reasonably healthy environment for online advertising. We’re no longer seeing the revenue spikes of the early growth years, but more sustainable revenue increases that suggest the industry may be experiencing a longer term recovery,” says Tom Hyland, PricewaterhouseCoopers partner.

Consumer brand advertisers represent the largest category of advertiser spending at 35% of Q2 2003 online ad revenues, up from 32% for the year-ago quarter. Computing advertisers, representing the second-largest category of online ad spending, accounted for 20% of Q2 online ad revenues, followed by financial service companies at 13%. Among consumer brand advertisers, retailers spent the most online, accounting for 44% of the consumer category, followed by automotive at 20%, entertainment at 15% and travel at 13%.

Spending among all online advertisers on paid search soared, up to 31% of online ad spending in the second quarter from only 9% a year earlier. Classified ads accounted for 18% of ad spending the second quarter, up from 15% a year earlier.

“The continued strength in paid search and classified reflect in part a strong response to demand from marketers and advertisers for more accountability,” says Pete Petrusky, PricewaterhouseCoopers director.

Greg Stuart, IAB CEO, calls the prognosis for a steady recovery in the online advertising marketplace “bright.” “With Internet usage and broadband adoption continuing to escalate, marketers are throwing their weight and dollars behind interactive advertising,” he says.


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