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Joint report reveals online ad recovery

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A recovery in Internet advertising is under way, according to a joint report released last week by ad serving company DoubleClick and Internet research service Nielsen//NetRatings.

The report, titled "Year in Online Advertising 2003," indicates online advertising spending and volume rose significantly in 2003.

Online ad spending was up 20% in 2003, reaching $7.2 billion, according to independent research from the Interactive Advertising Bureau and Forrester Research, which was included in the report. Ad impressions grew from 136.6 billion impressions in the first quarter of the year to 280 billion impressions in the fourth quarter.

"It was a remarkable recovery year," said Charles Buchwalter, VP-client analytics at Nielsen//
NetRatings.

However, he added, "When you start peeling the onion, you realize that not everything was up across the board."

Automotive leads growth

Online advertising growth was led by the automotive industry, which increased online advertising by 74.9% in 2003 over 2002, based on ad impressions. Other industries that increased online advertising in 2003 were public services (up 32.5%), telecommunications (up 31.2%), Web media (up 27.3%) and health care (up 20.5%).

B-to-b online advertising grew 15.8% in 2003, the report found.

However, some industries decreased online advertising in 2003, including retail (down 23.9%), hardware and electronics (down 3.7%), and entertainment (down 2.0%).

The report also looked at growth in different online ad formats, including rich media, pop-ups and search.

Rich media had significant growth in 2003 as more advertisers embraced the format, which delivers multimedia components such as audio, video and animation.

According to Nielsen//NetRatings’ AdRelevance data, rich media formats made up 17.4% of all online ads, up from 8% in 2002. DoubleClick’s ad serving data found an even higher percentage, with rich media ads making up 39.7% of all online ads. Nielsen//NetRatings and DoubleClick have different definitions for rich media, and DoubleClick measures only the ads served by its DART system, whereas Nielsen//NetRatings measures a sampling of the entire online advertising universe.

One key finding of the report is that traditional advertisers are embracing rich media. Fortune 500 companies accounted for more than one-third of rich-media ads in 2003, led by telecom companies such as SBC (2.2 billion rich-media impressions in the fourth quarter), AT&T Wireless (1.9 billion impressions) and Verizon (576 million impressions).

"Most traditional advertisers are heavily skewed toward brand advertising, and ads with video and TV embedded in them gave many of them a reason to reconsider online advertising," Buchwalter said.

Greg Stuart, president-CEO of the Interactive Advertising Bureau, said, "The fact that a discernible number of Fortune 500 advertisers are increasing their online efforts is gratifying and not a surprise to us."

Search was another high growth category in online advertising. The report cited research from Forrester Research’s "Searching for Digital Marketing’s Growth" study in October that found 60% of marketers planned to increase spending on search.

However, search is category specific. For instance, a DoubleClick survey found that 58% of users searching for consumer electronics products used a search engine and 53% of those searching for prescription drugs used a search engine. But the rate of search engine usage was lower in other categories, including telecommunications (38%) and credit cards (20%).

"Year in Online Advertising 2003" was compiled using data from DoubleClick’s DART ad serving system, Nielsen//NetRatings’ Internet audience measurement service, Nielsen Media Research’s Monitor Plus offline research, and Nielsen//NetRatings’ AdRelevance online advertising service.

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