May 23, 2008

According to the Interactive Advertising Bureau (IAB) 2007 Internet Advertising Revenue Report, online ad revenues totaled $21.2 billion last year. That was 26.1 percent higher than the previous year, which many industry analysts considered it a record year as well.

The IAB said that 4th quarter Internet advertising revenues reached $5.9 billion last year, the highest ever for a single quarter and actually 24 percent higher than the same period in 2006.

The IAB said that search, display, classifieds and lead generation all continued growing as well. As in prior years, consumer advertisers were the largest category of Internet advertising spending, at 55 percent of 2007 full-year revenues, up from 52 percent from the full year 2006.

David Silverman, partner at PwC said "despite the current state of economic uncertainty, 2007 was another record year and the 13th consecutive record quarter."

eMarketer predicts that despite continued strength relative to most other media, Internet ad spending growth should decrease to about 16 percent for next year. This slowdown reflects a combination of the maturing online ad market and overall economic weakness in the global economy.

David Hallerman, senior analyst at eMarketer said "in four years from now, the anticipated growth in online video advertising combined with continued strength in more established Internet ad categories, such as paid search and classifieds, will mean spending growth greater than 20 percent for the first time since the beginning of this year."

There should be an uptick in 2010 due to a recovering economy and larger influx of branding-oriented ad dollars flowing online.

One contributing source of those escalating spends will be video ads, which are relatively expensive for now, but should come down in price in the next eighteen months.

Source: eMarketer.