Online Ad Revenue Soared 30% Higher in 2005

IAB Reports Top 10 Sites Got 72% of $12.5 Billion Total

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NEW YORK (AdAge.com) -- Advertisers spent $12.5 billion for online advertising in 2005, 30% more than in 2004, according to the Advertising Revenue Report released today by the Interactive Advertising Bureau and PricewaterhouseCoopers. Internet advertising accounted for nearly 5% of total U.S. ad revenue in 2005.
There are no signs that the rapid growth of online advertising will slow down any time soon, according to the IAB.
There are no signs that the rapid growth of online advertising will slow down any time soon, according to the IAB.

Online ad revenue was up 34% in the fourth quarter of 2005 compared to the year-ago period.

Continued growth
Greg Stuart, CEO, IAB, said there are no signs that the swift growth of online advertising will slow down any time soon. "We are confident that this growth trend will continue as more marketers find interactive to be an imperative and additional platforms including broadband video, gaming, iPTV and others continue to emerge as real opportunities," Mr. Stuart said.

Last year 41% of ad dollars spent online went toward keyword search. Thirty-four percent was spent for display advertising, a category that includes sponsorship, slotting fees and rich media, down from 2004 (39%). Classified ads had virtually the same share of the market (17% in '04 vs. 18% in '05). Spending on referrals and lead generation increased from 2% in 2004 to 6% of the market in 2005.

B-to-B and consumer split
Online ad sales are about evenly split between business-to-business advertisers and consumer advertisers (49% to 51%). Of consumer advertisers, 47% of the ad spending is done by the retail industry, 20% automotive, 14% leisure and 10% entertainment.

However, only a few leading companies are reaping most of the benefits of all this ad spending online. Seventy-two percent of all revenue collected in the fourth quarter of 2005 was earned by the top 10 ad-selling companies. Ninety-five percent of all revenue was earned by the top 50 companies.
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