Internet Advertising Revenues Grow 35% in '06, Hitting a Record Close to $17 Billion

NEW YORK--(BUSINESS WIRE)--The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC) today released the Internet Advertising Revenue Report which shows record results for the full year and final quarter of 2006. Internet advertising revenues in the U.S. continued upward totaling $16.9 billion in 2006, a new annual record exceeding 2005 by 35%. Q4 2006 internet advertising revenues totaled $4.8 billion, representing record revenues for a single quarter and a 35% increase over same period in 2005.

“We have every confidence that this growth trend will continue as marketers allocate more of their total marketing dollars to interactive and the industry delivers effective and innovative platforms for connecting with consumers.”

“Interactive advertising revenues continue to show solid growth as advertisers and agencies recognize that it is a medium that can uniquely affect consumer behavior from product awareness, to purchase intent, to actual purchase and then brand loyalty,” said Randall Rothenberg, President and CEO of the IAB. “We have every confidence that this growth trend will continue as marketers allocate more of their total marketing dollars to interactive and the industry delivers effective and innovative platforms for connecting with consumers.”

The report states that search, display, classifieds and lead generation all continue to grow at a healthy rate with an increase in both performance-based and CPM or impression-based pricing. Consumer advertisers continue to represent the largest category of internet advertising spending.

“The continuing strong growth of interactive advertising as evidenced by the full year 2006 survey results proves the importance of this medium to all types of marketers,” says David Silverman, partner, Assurance, PricewaterhouseCoopers. “The ability for these marketers to achieve both performance-based and branding objectives with interactive advertising is the foundation for this exceptional growth.”

“The results for 2006 show the internet continues to offer marketers the widest spectrum of advertising formats, from search-based text ads to dynamic rich-media and broadband video ads,” notes Peter Petrusky, director, Advisory, PricewaterhouseCoopers. “Online publishers may continue to experience growth as marketing budget allocations to all interactive forms continue to increase.”

ADVERTISING FORMATS	2006 (Ttl =$16,879)		2005 (Ttl = $12,542M)

Type of Advertising	$	% share of market	$	% share of market
Display Advertising	3,685	22%	2,508	20%
Sponsorship	496	3%	627	5%
Slotting Fees	0	0%	125	1%
Rich Media (including Broadband Video)	1,192	7%	1,004	8%
All Display	5,373	32%	4,264	34%
Keyword Search	6,799	40%	5,142	41%
Classifieds	3,059	18%	2,132	17%
E-mail	338	2%	251	2%
Lead Generation	1,310	8%	753	6%
TOTALS:	16,879	100%	12,542	100%

INDUSTRY CONCENTRATION
	FY 2006	FY 2005
Top 10	69% ($11,647)	72% ($9,030)
Top 25	82% ($13,841)	86% ($10,786)
Top 50	92% ($15,529)	95% ($11,915)

PRICING MODELS
	FY 2006	FY 2005
CPM or Impression	48% ($8,102)	46% ($5,769)
Performance Deals	47% ($7,933)	41% ($5,142)
Hybrid	5% ($844)	13% ($1,630)

Conducted by the New Media Group of PricewaterhouseCoopers, the Advertising Revenue Report was launched in 1996 by the IAB, and aggregates data from all companies that report meaningful online advertising revenues. The results are considered the most accurate measurement of interactive advertising revenues with the data compiled directly from information supplied by companies selling advertising on the Internet. The survey includes data concerning online advertising revenues from Web sites, commercial online services, free e-mail providers, and all other companies selling online advertising. First and third quarter revenue reports are estimates, with the actual figures being released along with second and fourth quarter data respectively. PwC does not audit the information and provides no opinion or other form of assurance with respect to the information.

A copy of the full report is available at http://www.iab.net/resources/ad_revenue.asp.

The IAB sponsors the Internet Advertising Revenue Report, which is conducted independently by the New Media Group of PwC. The full report is issued twice yearly for full and half-year data, and top-line quarterly figures are issued for the first and third quarters.

About PricewaterhouseCoopers:

PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 140,000 people in 149 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.

"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

About the IAB:

Founded in 1996, the Interactive Advertising Bureau (www.iab.net) represents over 300 leading interactive companies that actively engage in, and support the sale of interactive advertising. IAB members are responsible for selling over 86% of online advertising in the United States. On behalf of its members, the IAB evaluates and recommends standards and practices; fields interactive effectiveness research, and educates the advertising industry about interactive advertising.