The biggest quarter ever for Internet advertising revenue meant companies raked in $4.2 billion for the third quarter of 2006, up by a third from the same period in 2005.

The Interactive Advertising Bureau and its partners at PricewaterhouseCoopers announced the latest online ad revenue figures, saying the numbers had again passed $4 billion. Nearly $4.1 billion in revenue filled the coffers of Google, Yahoo, and others in the second quarter of 2006.

"Interactive advertising, with its eighth consecutive quarter of growth and the largest single quarter ever, is on pace for its biggest year," said David Silverman, a partner in Assurance at PricewaterhouseCoopers. "This growth follows the trend of where consumers are spending their media time and the unique ability of Interactive advertising to effectively target and monitor ad campaigns."

That shift has also contributed to the downward spiral of the fortunes of the print media industry. Newspapers and magazines have been buffeted continuously by the Internet, as readership slides and carries the ad rates the print industry can charge down along with it.

Jason Calacanis of AOL and Weblogs, Inc, blogged that the rise in revenue is the real story of the Web 2.0 meme:

Is the spike over the past year another bubble? I don't think so, I think the curve is getting more steep due to the following facts:
a) there are more advertisers online today.
b) it's getting easier to spend money online
c) Google Adsense/Adwords (a huge part of part B above)
d) Yahoo, MSN, AOL, and Google reaching scale, which in turn allows major advertisers to reach comparable audience sizes to TV
e) audiences shifting from TV, radio, and magazines to the Internet.
Search Engine Watch contributor Greg Sterling posted a hit list of print media that would be surpassed in revenue by online ad dollars:

US online ad revenues (with search at about 40%) are on track to reach more than $16 billion this year, up from $12.5 billion last year. If so, online revenues would be greater than US ad revenues in the following traditional media:
• Print yellow pages (for the first time)
• Consumer magazines
• Business magazines
• Outdoor
Yahoo CEO Terry Semel could be proven correct in saying potential Internet ad revenue could be underestimated. Blogger Mark Evans, who works as VP of operations for b5media Inc, wrote that marketers probably don't even have online ad placement figured out yet:

It's a pretty impressive number, particularly considering many advertisers are still trying to get a handle on where to put their online advertising dollars. Do they go with traditional banner ads? Do they plunge into the worlds of CPC, CPM or CPL? Do they decide to be pioneers in the online video and audio markets. Or do they get into the user-generated content area such as blogs and social networking sites.
It leads (me to) believe there is still huge momentum left in the online ad market as companies start to even more comfortable with the idea of shifting part of the ad budgets to the Web.
Google closed at $489.30 yesterday. Maybe the trend in ad revenue means even at that lofty figure Google has more room to grow.

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Tag: Internet advertising

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