November 28, 2006

Last Wednesday, the IAB (Internet Advertising Bureau) and PwC (PricewaterhouseCoopers) released new data that reveals U.S. Internet advertising revenues reached a new record of $4.202 billion in the 3rd quarter of this year.

Overall, this represents a 35 percent increase over the $3.102 billion figure posted for the third quarter last year, and a 2 percent increase over the 2006 second-quarter total of nearly $4.101 billion.

"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 of PwC.

Yesterday, Merrill Lynch has raised its initial estimates. The firm now estimates that U.S. online ad revenue for the first three quarters of this year will be 35.5 percent more than in the same period last year.

Merrill Lynch previously forecast a 31 percent increase. The company currently expects U.S. online ad spending in the fourth quarter to be 30 percent more than it was in the fourth quarter of last year, up from its estimate of 27 percent.

For 2006, Merrill Lynch is projecting 23.3 percent growth in online ad spending, up slightly from its previous estimate of 22.5 percent growth.

Merrill expects paid search to increase 27 percent in 2007 and branded ads to grow 21 percent overall.

Even with the addition of online video ad spending expected next year, Merrill Lynch projects that paid search will still account for over 42 percent of online advertising spending, an increase of about one percentage point from 2006.

Source: eMarketer