IAB: Nearly $1 Billion Spent on Internet Ads in 1997

The Internet Advertising Bureau said its
latest report shows that spending for advertisements on the Internet
reached about $906 million in 1997, a “breakthrough year.”

If fourth-quarter spending patterns continue in 1998, the industry would
become a billion-dollar business.

The 1997 total represents an increase of 240% from 1996, according to the
report. And fourth-quarter ad sales hit $335.5 million, up from $227.1
million in the quarter ending in September. Total revenues in the first
quarter of 1997 were $129.5 million, the second quarter posted $214.4 million.

The survey was done by Coopers & Lybrand and is considered one of the best
estimates of the nebulous dollar amounts that get bandied about in the world
of Internet advertising, as Web operations report their figures anonymously.

“1997 was definitely a breakthrough year for Internet advertising,” said Rich
LeFurgy, IAB chairman and senior vice president, advertising, ABC News/ESPN
Internet Ventures. “The industry saw continued spectacular growth, with a
billion dollar run-rate established in the last quarter of the year. This
places the medium within the ranks of traditional media for the first time.”

Computer advertisers accounted for 33% of fourth-quarter expenditures;
consumer-related ads comprised 26%, according to the survey. In the two prior
quarters, consumer ad spending had outstripped computer ads, but the fourth
quarter saw strong spending by hardware and software vendors.

Although the rate of increase in ad spending for Internet media is
impressive, it still fell behind all other forms of media, including
billboards. The IAB study, entitled “Advertising Revenue Reporting
Program,” represents data from more than 200 publishers. The survey
includes data concerning online advertising revenues from Web sites,
commercial online services, off-line delivery services and e-mail providers.

“We are witnessing the evolution of the Internet into a vitally important
consumer advertising medium, with increased online spending and consumer
usage, underscoring its value to advertisers,” said Tom Hyland, chairman of
the Coopers & Lybrand New Media Group.

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