Internet ad revenue climbs by 26 per cent

As of June, advertisers had spent $5.8bn to place ads online this year, a 26 per cent increase compared with the first six months of 2004, according to a new report.

This record spending was once again led by ads linked to Web search results, said the Interactive Advertising Bureau, or IAB, which released the report on Monday in conjunction with PricewaterhouseCoopers. Spending on search-related ads reached $2.3bn, a 27 per cent increase compared with the same period last year, the report said.

Overall, search ads accounted for 40 per cent of Internet ad sales, in line with last year, the group said. Banner ads and classified listings were the next-biggest ad categories, attracting 20 per cent and 18 per cent of the spending, respectively.

"The consistent growth in overall revenues shows marketers may be shifting more of their total advertising budgets to online," David Silverman, a partner at PwC, said in a statement. "This is a natural development, as research shows more consumers are spending a larger percentage of their media time online."

Advertisers spent nearly $3bn online in the second quarter alone, a 26 per cent increase over the same period last year, IAB noted.

Online ads that incorporate streaming video or audio accounted for just 8 per cent of online ad revenue in the first half of the year but are among the fastest-growing segments. Spending on these 'rich media' ads grew by 26 per cent, the report noted.

The only category that contracted was online sponsorships, in which an advertiser sponsors an entire site, online event or email message. Sponsorships now make up just 5 per cent of online ad sales, down from 9 per cent in the same period last year.