Internet ad revenue hit $31.7 billion in 2011, topping previous record

Mobile advertising showed explosive growth

Internet advertising revenue soared to a record high of US$31.7 billion in 2011, up 22 percent from 2010, according to a report released Wednesday by the Interactive Advertising Bureau and conducted by Pricewaterhouse Coopers.

Mobile advertising was the fastest growing of all segments, expanding by almost 150 percent to become a $1.6 billion industry.

The rate of growth is particularly impressive because digital advertising also shattered previous records in 2010. The industry grew by a larger percentage in 2011 than it did in 2010.

The industry continues to grow so rapidly because advertisers still have a way to go before they match consumers' embrace of Internet platforms, explained Sherrill Mane, the senior vice president of research and analytics at IAB.

"There's a fact of life called consumers. Consumers are using and embracing digital more and more, and fundamentally the advertising business is still playing catch-up. The money has to flow to where the folks are," she said.

Search advertising, digital video commercials and sponsorships grew as a percentage of the digital advertising market in 2011, according to the study. But mobile advertising was clearly the star.

Mane said that the explosion in mobile advertising reflects both the increasing popularity of smartphones and the relative newcomer status of the medium.

"For many reasons, one can assume that mobile will continue to grow at a rapid clip. One reason is that mobile is catching on with consumers, as well as with marketers and advertisers," she said.

However, "There's a proportion issue: It's not that mobile is outpacing all other digital so much as mobile is growing explosively from where mobile started," she added.

Internet advertising brought in almost half as much as all forms of television advertising last year, according to television data from Kantar Media.

Retail advertisers continue to be the biggest spenders in online advertising.

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