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Ad Spending in Top Web Categories Up 86 Percent

The top 25 industry categories increased their Internet ad spending 86.7 percent for the first three quarters of 1998, compared to the same period in 1997, according to a new report.

InterMedia Advertising Solutions' (IAS) InterWatch report said that computers and software (including online and Internet services) continue to lead all industries in spending, accounting for nearly half of all Internet advertising (47.3 percent at $321.6 million); however, the category ranks only 20th in growth at 64 percent.

Dramatic growth is seen in categories such as medicines (up 403%), government and organizations (up 351.9%), direct response companies (up 273.9%), retail (up 163%) and financial (up 127.8%), the report said.

Over 400 industry categories are tracked by the InterWatch report. InterWatch also monitors Internet spending as part of overall advertising expenditures. Among the approximately 300 Web sites tracked, the top 50 sites accounted for more than $636.5 million in revenue through the first nine months of 1998, a growth of 90.5 percent over 1997. The Internet Advertising Report recently said that spending on online ads will approach $2 billion for all of 1998.

"We know that computers and software continue to be major players, but what we are seeing is that many other industries have discovered the importance of this medium," said Joe Philport, president of IAS. "Advertisers in these industries are now using the Internet as an essential vehicle for implementing their marketing strategies."

Following computers and software in ad spending, the financial industry represented 8.8 percent of the dollars spent on the Internet at $59.9 million. Direct response companies jumped to $47.3 million with 7 percent, followed by the media and advertising category in fourth at $35.2 million, with 5.2 percent. Local services and amusements were closely behind in fifth at $33.2 million with 4.9 percent of Internet ad expenditures through the first three quarters of 1998.

The Internet now represents 1.5 percent of overall ad budgets, the report said. For the full year of 1997 the Internet claimed .74 percent. Microsoft was the top spender on the Internet through the first nine months of 1998 at $25.5 million, up 7.8 percent over 1997. IBM is closing the gap at $21 million, a 77 percent increase. Excite was third at $8.8 million, followed closely by General Motors up 111.8 percent to $8.2 million.

InterMedia Advertising Solutions was formed to monitor and provide industry detail on advertising placement and expenditures on the Internet. The information is delivered using the industry standards developed by IAS' sister company, Competitive Media Reporting (CMR).

CMR provides strategic advertising intelligence to advertising agencies, advertisers, broadcasters and publishers. CMR and IAS are VNU Marketing Information Services companies.