Sick of Ads? Don't Read This

SAN FRANCISCO (08/08/2000) - Despite debates over the efficacy of online advertising, companies continue to pour more cash into their Internet ad campaigns.

The Internet Advertising Bureau and consulting firm PricewaterhouseCoopers LLP announced Monday that first-quarter advertising spending on the Net reached US$1.95 billion, a 10 percent climb over year-end 1999 figures and a 182 percent leap over the first quarter of last year.

"We have become accustomed to the continued sustained growth of online ad revenues, and the report for the first quarter of 2000 continues that very trend," says Rich LeFurgy, chairman of the IAB and general partner of WaldenVC.

Another new study conducted by merchant bank Veronis, Suhler & Associates estimates that Internet advertising will quadruple to $24 billion in 2004, surpassing cable, network TV and consumer magazine advertising.

According to the IAB report, the categories that led online ad spending during the first quarter were consumer-related (31 percent), financial services (15 percent), computing (15 percent), new media (12 percent) and business services (10 percent).

Companies still favor banner advertising online, which accounted for 52 percent of first-quarter Internet ads. For the first time, the IAB's report analyzed classified, referral and rich-media advertising data. Combined, the new categories accounted for almost 10 percent of online advertising.

The report also gauged what criteria advertisers used when purchasing online ads. Almost 50 percent of online advertising deals were based on a combination of CPM (cost per 1,000 impressions) and performance-based advertising.

Forty-two percent of advertising deals were impression-based only, while only 10 percent were performance-based.

Although the numbers are not in yet, the IAB expects online ad-spending growth to slow during the second quarter, following the rash of dot-com closures and recent market volatility.

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