Study: US online ad spending up to $US17B in 2006

Advertising up for the fourth consecutive year

Online advertisers in the U.S. spent a record $US16.9 billion in 2006, up 35 percent from 2005, the fourth consecutive year the market has grown, according to a study released this week by the Interactive Advertising Bureau.

According to the report, search, display, classifieds and lead generation all continue to grow, and companies catering to consumers continued to spend the most money on online ads. The strong growth of advertising online also shows that it is an important medium to a variety of advertisers, the report said.

"Interactive advertising revenues continue to show solid growth as advertisers and agencies recognize that it is a medium that can uniquely affect consumer behavior from product awareness, to purchase intent, to actual purchase and then brand loyalty," said Randall Rothenberg, president and CEO of the advertising bureau, in a statement. "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."

Some of the findings of the study include:

- Consumer-related advertising accounted for 52 percent of online ad revenue in 2006.

- Revenue from advertising on search engines accounted for 40 percent of online ad revenue in 2006.

- Display advertising generated 32 percent of online ad revenue in 2006.

- The growth trend was also observed in a separate study released this week by Forrester Research Inc.

Recent major acquisitions in the online advertising space, including Microsoft's US$6 billion purchase of online marketing company aQuantive, signal the renaissance of online advertising, according to the Forrester report.

"Improved technology [including technology that makes it easier to target and manage ads] and the increased appeal of display ads vis-a-vis search and e-mail marketing is driving more aggressive adoption of online media," said the report's author, Shar VanBoskirk, in the study.

In addition, marketers are tapping into the unique value of traditional display ads, she said in the report.

"Display ads have more formats than paid search listings and are better for mass marketing and customer acquisition than e-mail," VanBoskirk said. "Also, advertisers frustrated with the growing saturation of search media are turning to display ads for more flexible and oftentimes more affordable solutions."

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