One crucial element -- ability to deliver interested customers
Thursday, May 24, 2007
Internet advertising revenue, fueled by increases in classified ads, lead generation and display advertising, grew by 35 percent last year to $16.9 billion.
In the fourth quarter alone, $4.8 billion was spent on online advertising, a 33 percent increase over the same quarter a year earlier and the most for any quarter, according to a report by the Interactive Advertising Bureau.
The jump in revenue caps a 10-year span in which the Internet sector has gone from $907 million, or less than 1 percent of all advertising, to 5.9 percent of the $286 billion spent last year by advertisers.
The figures show a growing willingness by major advertisers to turn to online ads as an effective way to reach consumers, said Randall Rothenberg, advertising bureau president and CEO.
"We have every confidence that this growth trend will continue as marketers allocate more of their total marketing dollars to interactive and the industry delivers effective and innovative platforms for connecting with consumers," said Rothenberg.
Search ads, featured on sites like Google and Yahoo, continue to generate the most revenue for interactive advertising. Search ads generated $6.8 billion last year, or 40 percent of all online ad spending, a slight dip from the previous year, when they accounted for 41 percent of all online ad spending.
Display ads brought in $3.7 billion last year, or 22 percent of all online ad spending, while classified generated $3.1 billion, or 18 percent of all online ad spending.
The largest growth occurred in lead generation, which involves the delivery of interested customers to a company. That category grew by 73 percent to $1.3 billion, followed by classified ads, which grew by 48 percent.
Dean DeBiase, chairman and CEO of Fathom Online, a San Francisco digital marketer, said the jump in online ad spending represents a fundamental shift by advertisers, who now consider Internet advertising a core part of their strategy instead of a fringe experiment.
He said with about 70 percent of homes online, part of the growth is just companies following the migration of customers to the Internet. He also said the ability of online campaigns to deliver measurable data and performance feedback has made the Internet popular with advertisers.
"The most important things is the ability to know which half of your ad spend is working and what is not working," said DeBiase.
"But it goes beyond that. Now by geography, time of day, demographics, we can tell people how effective their ad spend is. With that, you can go after different demographics and pockets. Now that's real direct marketing."
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