New Highs for Web Ad Revenues

A new report from IAB (Interactive Advertising Bureau) shows continued double digit growth for online advertising in the first half of 2012.  The report indicates that U.S. online advertising totaled just over $17 billion for the first six months of 2012, up 14% from last year.  Mobile ad revenues led the pack, up 95% to $1.2 billion, search revenues were up 19% to $8.1 billion, video ad revenues up 18% to just over $1 billion, while display $5.6 ad revenues growth slowed to 4% ($5.6 billion).  In contrast, classified, rich media, and lead generation advertising categories all saw their share of online ad revenues decline.

“This report establishes that marketers increasingly embrace mobile and digital video, as well as the entire panoply of interactive platforms, to reach consumers in innovative and creative ways," said Randall Rothenberg, President and CEO, IAB. “These half-year figures come on the heels of a study from Harvard Business School researchers that points to the ad-supported internet ecosystem as a critical driver of the U.S. economy. Clearly, the digital marketing industry is on a positive trajectory that will propel the entire American business landscape forward.”

 The report shows that the online ad business remains highly concentrated, with the top 10 ad-selling companies getting 73% of all online ad revenues (the Top 50 get 90%).  This level of concentration is mitigated somewhat in that most of those top 10 are ad-networking services that aggregate ad sales and placement for large numbers of websites and web services.

  As the industry continues it search for acceptable audience and advertising impact metrics, the IAB differentiate among three basic models used to determine online advertising prices.  Performance-based pricing models focus on ad-specific online use metrics, and has been the most widely used approach since 2006.  The current report shows continued growth in this segment - to the point where it accounts for two-thirds of U.S. online ad revenues.  CPM-based pricing models mirror traditional ratings and circulation approaches by basing value on the size and makeup of the audience for the online sites and services  that host the advertising.  The share of revenues based on CPM-based pricing models has been falling since 2006, accounting for 31% of online ad revenues in the first half of 2012.  The share of online ad revenues generated through Hybrid-based pricing models (which use some combination of the other two) fell to 2% in 2012, after holding roughly steady at 4-5% since 2006.


Sources - Web Ad Revenues At $17 B in First Half Set Record,  Research Brief blog
IAB internet advertising revenue report: 2012 first six months' results,  full IAB report