Online ad revenue growth outpaces impressions

Online ad revenue growth outpaces impressions.
Citing growth in online advertising among Fortune 500 companies, a new study shows 2003 was a very good year for Web advertising. The report, by Nielsen/NetRatings and DoubleClick, offers “irrefutable evidence that 2003 was a major recovery year for online advertising,” according to Charles Buchwalter, a vice president at Nielsen/NetRatings. Online ad revenue in the U.S. increased 20 percent in 2003, to $7.2 billion. In the fourth quarter alone, online ad spending was $2.2 billion, a 38 percent increase over the same quarter a year earlier.

These are stunning numbers, but the real stories in this report are beneath the surface. Ad impressions were only up 4 percent, which means all that revenue came from fewer ad impressions. That’s significant to me on many levels. One, as rich media advertising increases (it was up 200%), advertisers are spending more per ad placement than they were with straight banner or tile ads. Two, this is evidence that contextual advertising, which also costs more per impression, is being accepted by the advertising community. And three, the revenue increases of last year demonstrate a level of understanding about the Internet that was lacking in previous years. In the boom years, advertising was presented in pure reach/frequency terms. “Dollars follow eyeballs” was the slogan I heard many times. The truth, however, is that the Internet isn’t broadcasting, and reach/frequency isn’t the best game in town anymore.

Another huge story for local television in this report is that automotive ad impressions were up 75 percent. The money being spent on those ads comes primarily from television.

New York Times story
MediaDailyNews story
DoubleClick .pdf file

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