Web Ad Spend Hits Record High

NEW YORK As expected, online ad spending hit a record high in 2006 of $16.8 billion, according to an estimate by the Interactive Advertising Bureau.

That marks a 34 percent increase from 2005, the IAB said. In the fourth quarter, online ad spending was $4.8 billion, up 32 percent from the same period a year ago.

“The increase underscores marketers’ understanding that interactive advertising can engage consumers, build brands and sell products and services,” said Randall Rothenberg, the IAB’s president and CEO, who was named to the posts in December.

The IAB compiles estimates for quarterly Web ad spending, based on data collected by PricewaterhouseCoopers of the top 15 Web ad sellers. It issues full reports twice a year, breaking out spending by category and sector. The full-year report will be available in April, the IAB said.

The report is the latest sign that Web advertising continues to gain share of marketing budgets. The fourth quarter, which is traditionally the biggest spending quarter for online ads, saw a 15 percent increase over the third quarter, the IAB said.

Financial analysts have issued bullish reports recently about the potential market for Internet advertising, although with more moderate growth rates.

Piper Jaffray forecasts U.S. Internet advertising to hit $42 billion in 2011, with a compound average growth rate of 17 percent. Similarly, eMarketer late last month said the industry’s maturity and slower economic growth would knock Web ad growth down to 19 percent this year.