Report: Third-quarter spending on web ads shot up 30 percent

Consumer-related advertising has emerged as the solid No. 1 advertising category
on the internet, accounting for 32 percent of all online advertising in the
third
quarter.

Report: Third-quarter spending
on web ads shot up 30 percent

Hit $1.2B; still more than half spent on banners

By Jeremy Schlosberg

     The hard numbers are in, and they’re sky-high.
     More than $1.2 billion was spent on advertising online for the third quarter of 1999, according to the Internet Advertising Bureau (IAB), which collects actual advertising expenditure figures directly from web sites.
    This is the first time that internet advertising expenditures have topped the one billion dollar mark for one quarter.
    The $1.2 billion figure is 30 percent higher than the $934 million spent during the second quarter of 1999, and 148 percent above the figure from the third quarter of 1998.
     In all of 1998, $1.9 billion was spent on advertising on the internet, according to the IAB.
    "These figures underscore the acceptance of online advertising by advertisers and consumers alike," said IAB chairman Rich LeFurgy at a press conference yesterday. "And this is important because online advertising is an essential part of many online business models."
     Banners ads accounted for 55 percent of the money spent on internet advertising in the third quarter of 1999, sponsorships for 27 percent.
     The catch-all category "other" was next with 12 percent; the category includes rich media, classifieds and keyword searches. Interstitials, ads which pop up between web pages, accounted for 4 percent.
      Email advertising represented 2 percent of the total advertising spending figure—not much, but the percentage did double since the second quarter, when email accounted for just 1 percent of the total.
    Consumer-related advertising has emerged as the solid No. 1 advertising category on the internet, according to the IAB, accounting for 32 percent of all online advertising in the third quarter of 1999. This was up from 29 percent in the second quarter and 27 percent in the first quarter. Computing was a relatively distant second, accounting for 21 percent of internet advertising spending for the quarter. Financial services was third at 19 percent (see chart).
    Retail advertising accounted for 48 percent of the advertising in the consumer-related category, up from 44 percent in the second quarter of 1999.
    Automotive was the second leading category in the consumer segment, comprising 19 percent of the spending. Travel was third with 8 percent.
     The third-quarter results solidify the conclusion that online advertising spending for 1999, when the hard numbers are in from the IAB in April, will end up far exceeding analyst predictions from 1998.
     Before 1999 began, Jupiter Communications had expected $3 billion to be spent on internet advertising in 1999, eMarketer had projected $2.61 billion, and Forrester Research a mere $1.75 billion. The IAB says that if past spending patterns hold for the fourth quarter, the total amount spent on internet advertising in 1999 should be around $4.4 billion.
    The IAB figures are based on a report conducted by the New Media Group of PricewaterhouseCoopers, and represents data from more than 200 companies, encompassing advertising activity from more than 1,500 web sites.

ADVERTISING CATEGORIES ON THE INTERNET
Ranked by percentage of overall internet advertising spending in the first three quarters
Advertiser Category	3Q99 (%)	2Q99 (%)	1Q99 (%)
Consumer-related advertising	32	29	27
Computing	21	22	20
Financial services	19	20	21
Telecommunications	6	n/a	n/a
Business services	5	n/a	n/a
Source: Internet Advertising Bureau

-Jeremy Schlosberg is the senior editor for new media.