First-Half Online Ad Revenue up 26% to $10 Billion

IAB Data Suggest Performance-Based Ad Buys Gain Share Over CPM Deals

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NEW YORK ( -- The web has always been friendly to performance-based interactive deals -- ads bought on either a cost-per-click or cost-per-action basis. But those types of deals appear to be grabbing a greater share of online ad spending, according to data from the Interactive Advertising Bureau and PricewaterhouseCoopers.
The IAB warned against reading too much into the spending numbers.
The IAB warned against reading too much into the spending numbers.

The IAB reported that online ad revenue reached nearly $10 billion in the first half of 2007. Of that total, 45% were deals based on the cost-per-thousand viewers, down from 48% a year ago, while 50% were performance deals, up from 47% a year ago. Deals classified as hybrids made up the remaining 5%.

IAB remains conservative
The share changes are small and the IAB warned against reading too much into them, especially at the mid-year point. The big picture, said IAB CEO Randall Rothenberg, is the experimentation that marketers are employing.

"Everything surrounding advertising planning, buying and selling is going through a pretty rapid evolution, and more and more really large marketers are coming into the marketplace," he said. "Agencies are saying their No. 1 priority is digital transformation. ... There's a lot of testing around things, especially by a lot of new players."

For that reason, he said, it's premature to suggest major trends based on small changes in share percentages.

Consumer advertising
In total, internet advertising revenue for the first half of 2007 increased 26.4% from the year-ago period. Consumer advertising represented the biggest share of second-quarter online ad revenue. Of consumer advertisers, retail led the way with a 46% share of second-quarter consumer ad revenue, followed by automotive at 21%t, leisure, which includes travel, hotel and hospitality, at 13%, entertainment at 9%, and packaged goods at 8%.

The IAB also breaks down concentration by revenue. Over the first half of 2007, 70% of ad dollars were spent among the top 10 online players. Only 1% of second-quarter revenue was from broadband video. Search rose from a 40% share of total online ad spending to 41%, or $4.1 billion.
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