IAB: 3rd Quarter Online Ad Spending Soars

Online ad spending for the third quarter of 2005 was a record $3.1 billion, a 33.9% increase over $2.3 billion spent on Internet ads in the third quarter of 2004, the Internet Advertising Bureau and PricewaterhouseCoopers said yesterday.

PricewaterhouseCoopers, which conducts the Internet Advertising Revenue Report for the IAB on a quarterly basis, estimated that Internet ad spending for 2005 could exceed $12 billion, up from $9.6 billion in 2004.

“More and more marketers have embraced Interactive as an essential medium to reach and engage their consumers in more immersive brand experiences,” said Greg Stuart, President and CEO, IAB, in a statement.

The IAB’s assessment is consistent with a recent report by New York-based research aggregator eMarketer. That report predicts online ad spending will reach $12.9 billion by the end of this year, more than double that of 2002.

Also like the IAB, eMarketer predicts online ad spending for the year will rise 33.7% from $9.6 billion in 2004. If the two organizations are correct, it will be the first time online ad spending has surpassed $10 billion in one year.

Forty two percent of online ad spending will go to paid search, eMarketer predicts.

Not surprisingly, online ad spending by U.S. companies is growing much faster than total media spending, which will be 5.2% higher in 2005 than in 2004, eMarketer predicts.