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Online ad revenue declines

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New York--Reflecting the performance of most of the advertising media world, Internet advertising revenue in the U.S. fell in the fourth quarter of 2001.

However, the decreases of 7.5% to $1.7 billion in the fourth quarter and 12% to $7.2 billion for all of 2001 were milder than those experienced by more established media such as TV and radio, according to the Interactive Advertising Bureau, which released year-end figures Thursday.

Robert J. Coen, senior VP-director of forecasting at Universal McCann, New York, last week compiled his own 2001 figures for all major media and determined Internet ad spending fell 11.6% to $5.8 billion. "Our [numbers] are somewhat different from [IAB's]," Coen told BtoB. "They were working off a much higher base." Coen plans to update his 2002 expenditure projections in June.

The Internet Ad Revenue Report, prepared each quarter by PricewaterhouseCoopers' New Media Group, also indicated cost-per-thousand, or CPM, pricing remains the dominant model for online advertising, with almost half (45%) of all deal revenues derived from CPM pricing in the fourth quarter. Performance-based deals accounted for 13% of deals reported, while hybrid deals that combine both CPM and performance-based components represented 42% of all deals.

Choice of advertising formats changed little for marketers in 2001, compared with a year earlier. Despite all the industry complaints about banner ads, they still comprise by far the largest share of online ad formats. Banners dipped from 48% in 2000 to 36% in 2001, and sponsorships dropped slightly to 26% in 2001 from 28% a year earlier. Meanwhile, superstitials dropped one percentage point to 3%, while e-mail (3%) and rich media (2%) remained flat. Classified rose to 16% from 7%, and key word searches to 4% from 1%.

--Carol Krol

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