Web Ad Spending Nears $10 Billion in First Half


U.S. online advertising revenue surged to a new high of nearly $10 billion in the first half of the year, rising 27 percent from a year before, according to data released Thursday.

The figures from the Interactive Advertising Bureau and PricewaterhouseCoopers underscore how quickly spending by marketers is shifting to the Internet, often at the expense of traditional media like newspapers or radio.

"The torrid growth of interactive advertising revenue persists and these results are really no surprise but very welcome news," IAB Chief Executive Randall Rothenberg said in a statement.

Second-quarter revenue rose 25 percent from a year earlier, the data showed, to a quarterly record of $5.1 billion.

"Advertisers recognize the continued growth in the online audience and the growing opportunity to target and monetize that audience," said Pete Petrusky, a director of the entertainment, media and communications practice at PricewaterhouseCoopers.

One outgrowth of the boom is that media and technology companies are building up their online advertising businesses, partly through acquisitions.

Among recent deals, Google agreed to pay $3.1 billion for ad serving and tracking company DoubleClick, while Microsoft bought online marketer aQuantive for $6 billion.

Jean-Philippe Courtois, head of Microsoft International, said this week that the online advertising market was growing between 15 and 20 percent a year worldwide while the global advertising market was gaining only between 2 percent and 3 percent.

At the same time, competition for those advertising dollars is growing, as firms ranging from telephone companies to cable operators try to court marketers in an industry long dominated by television networks, newspapers and radio broadcasters.

For now, the majority of Internet spending is highly concentrated on the most popular sites.

The top 50 Web sites accounted for more than 90 percent of the revenue from online advertising spending in the first half of the year, and the top 10 sites accounted for 70 percent, according to the IAB/PwC data.

Search advertising, led by Google, remained the most popular form of online marketing and accounted for 41 percent of the money spent at $4.1 billion in the first half of 2007.

Graphic display advertising, such as banners, grew to account for 32 percent at $3.2 billion, compared with $2.4 billion in the year-earlier period.