Online advertising revenue more than doubled during 1998, coming within striking distance of the US$2 billion plateau for the first time ever, according to a report released today by the Internet Advertising Bureau and accounting firm PricewaterhouseCoopers.
Web advertising revenue totaled US$1.92 billion during 1998 - a US$1 billion increase over the US$907 million in Internet ad sales from the year before, according to the IAB report.
The online industry logged fourth quarter ad revenue of US$655.6 million, up 34 percent from the third quarter of the year and nearly double the US$335.5 million in ad revenue reported during the fourth quarter of 1997.
And the spending was more balanced among advertisers during the fourth quarter. Internet staples such as computer and new media ads decreased as a percentage of overall spending while categories such as consumer products and financial services climbed in overall percentage of online spending compared to a year ago, according to the IAB.
The computing category, for instance, accounted for 20 percent of overall online ad spending in the final three months of 1998 compared with 33 percent of all spending during the same period in 1997. New media advertising decreased to 7 percent in the fourth quarter of 1998 compared with 11 percent the year before.
Mainstream advertising, meanwhile, increased in importance. Consumer product categories accounted for 29 percent of fourth quarter spending compared with 26 percent the year before. Advertising for financial services increased to 19 percent of overall online ad spending online for the period, compared with 11 percent during the final three months of 1998.
Top sectors represented in the consumer category include retail, auto, toys, travel and music.
During the fourth quarter of the year, the biggest players in the market raked in more of the available ad dollars than ever before. "The largest sites are getting larger," said Pete Petrusky, director of new media at PricewaterhouseCoopers, which managed the advertising survey on the IAB's behalf.
The top 10 Web sites drew 71 percent of all ad spending for the fourth quarter of 1998, compared with 67 percent at the same time the year before. The top 25 sites drew 86 percent of overall spending compared with 76 percent during the final three months of 1997. The top 50 sites brought in 92 percent of all online ad dollars for the fourth quarter of 1998, compared with 83 percent at the same time in 1997, according to the IAB.
Other key measures of market activity remained relatively consistent between 1997 and 1998. Banner advertising represented 56 percent of all online ads compared with 59 percent the prior year. Sponsorships declined to 30 percent from 36 percent at the end of 1997.
Hybrid pricing, in which advertisers pay both an up-front fee and some commissions based on performance, still dominated the market. Of all advertising online, 54 percent was priced using the hybrid model during the fourth quarter of 1998, compared with 52 percent in 1997, according to the study.
Pricing based on the volume of impressions delivered decreased to 40 percent from 43 percent while ads based purely on performance-based pricing represented 6 percent of the market compared with 5 percent a year ago.
