Online Ad Spending Spree

Gretchen Gallen
NEW YORK, NY -- While offline retailers are complaining that the holiday season got off to a disappointing start, web publishers have plenty of reason to be hopeful as advertisers pull out of a year-long slump.

Recent news from the Interactive Advertising Bureau (IAB) and the Online Publishers Association states that in addition to increasing broadband adoption rates, advertisers are starting to spend more and more of their dollars online.

There is even a projection from Forester Research that online sales this holiday will ring in upwards of $12 billion.

Research firms are attributing this boost in advertising revenue to the turnaround in the economy and the fact that advertisers are realizing how much revenue potential the web promises, in addition to the broad variety of online advertising vehicles that can be used to target consumers.

"Our prognosis for a continued and steady recovery is being realized and the outlook remains bright," said Greg Stuart, president and CEO of IAB. "With Internet usage and broadband adoption continuing to escalate, marketers are throwing their weight and dollars behind interactive advertising."

A recent report published by the IAB and PricewaterhouseCoopers found that Internet advertising in the United States in 2003 totaled nearly $3.3 billion, up more than 10 percent from the first half of last year.

The Online Publishers Association released recent information that third quarter ad revenue for web publishers grew an average of 46 percent over the same time last year.

According to Wired, most notable advertising activity can be seen on news and content sites. Research began tracking an uptick in the first part of this year, but not until now have advertisers felt so inspired to spend top dollars on a wide variety of online promotions.

The growth upsurge was evident in the second quarter of this year, which totaled $1.66 billion in revenue, a 14 percent increase over the same period in 2002.

According to Wired, there is even speculation that online publishers are starting to dominate the advertising space over traditional, offline advertising vehicles like print or television. Increasingly, states Wired, advertisers are willing to invest in rich media options, including paid search advertising options.

"Advertisers operate within an increasingly complex landscape, however, there is no denying that consumer Internet media usage continues to rise," said Tom Hyland of PricewaterhouseCoopers. "The Internet holds the promise of delivering the right audience at the right time - a winning combination for marketers of any type, and thus we should continue to see a favorable environment for increased Internet ad spending."