April 13, 2011, 3:47 PM

Online ad revenue increases nearly 15% in 2010, a report says

Search ads comprise 46% of online ad spending, says the Interactive Advertising Bureau.

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Online ad sales topped $26.04 billion in 2010, up 14.9% from $22.66 billion in 2009, according to the Interactive Advertising Bureau’s Internet Advertising Revenue Report, released today. The trade group credits an increase in sales volume and ad costs for much of the growth.

2010’s digital ad revenue for the first time makes the Internet the No. 2 ad venue in the U.S. as measured by total advertising revenue. It follows TV, which accounted for $28.60 billion in revenue in 2010, and beats newspapers, which ranked third with $22.80 billion.

Search advertisements brought in about $12.00 billion, or 46% of online ad revenue. Display advertising generated $9.90 billion, or 38%. Banners and other non-animated web display ads drove the largest portion of display advertising, with 24% of total online revenue, followed by rich media advertising (6% of total online ad spend), digital video ads (5%) and sponsorships (3%).

Other online ad forms contributing to total online ad revenue are classifieds and directories (10%), lead generation (5%) and e-mail (1%).

Retailers spent more money on digital advertising in 2010 than any other industry, contributing 21%, or about $5.54 billion of total online revenue. Telecoms (16%), financial services (12%) and the auto industry (11%) followed, with such areas as computer products, consumer product good manufacturers and travel accounting for smaller shares.

2010 fourth quarter revenue indicates 2011 will also be a growth year, says Sherrill Mane, the IAB’s senior vice president of industry services. The fourth quarter of 2010 was the strongest quarter on record for the industry, with online ad sales surpassing the $7 billion mark for the first time to finish at $7.45 billion.

The IAB report, prepared by PricewaterhouseCoopers from sales information provided by advertising companies and publicly available data, also estimated mobile ad spending for the first time. It estimates that advertisers spent between $550 million and $650 million on ads specifically designed for and delivered through mobile devices, including smartphones and tablets. The IAB did not break out mobile ad spending by ad type.

The IAB does not project future spending. But John Shuler, managing director of research firm Veronis Shuler Stevenson, predicted mobile ad spending will reach $8 billion in 2014 during his presentation of his own firm’s data during an IAB conference call  today that announced the findings. “Mobile has a strong future,” he says.

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