2002 Web Ad Revenue Down, Q4 Up

NEW YORK Internet advertising revenue dropped 16 percent in 2002 to $6 billion, according a report released today by the Interactive Advertising Bureau. Despite the year-over-year decline, 2002 ended on a high note with fourth-quarter revenue rising 9 percent to $1.6 billion from Q3.

The figures were from the IAB-sponsored Internet Revenue Report, conducted independently by the New Media Group of PricewaterhouseCoopers.

“A number of factors that had been negatively impacting revenue growth seem to be turning favorable, including a modest rebound in overall advertising spending,” said Pete Petrusky, director of the New Media Group at PricewaterhouseCoopers. “Also, sellers are no longer cycling through lost revenue from the dot-com fallout, and the sharp growth in high-speed Internet access adoption is providing more opportunities for large traditional brand advertisers to experiment with the successful larger and more creative ad formats.”

While banners and sponsorships continued to be the ad formats of choice last year, they lost ground to alternative forms of advertising on the Web, such as keyword search. Banners accounted for 29 percent of Internet ad revenue in 2002 and sponsorships represented 18 percent, down from 36 percent and 26 percent in 2001, respectively. The study also attributed the falloff in banner and sponsorship sales to the termination of several long-term deals.

Meanwhile, keyword search as an ad format represented 15 percent of online ad revenue in 2002, more than tripling its stake over 2001. Classifieds held steady, bringing in 15 percent of ad revenue on the Web in 2002.

The study also found that consumer goods advertisers continued to spend the most dollars online, representing 32 percent of all Web advertising. The computing category comprised 18 percent of advertising on the Internet, while financial services and media made up 13 percent and 12 percent, respectively.

The CPM pricing model remained the pricing model of choice, comprising 45 percent of all deal revenue in 2002 (down from 48 percent in 2001), while straight performance contracts were at 21 percent (up from 12 percent). Hybrid deals, a combination of CPM and performance, totaled 34 percent (down from 40 percent).