Internet Ad Revenue Near $4B For Quarter

    May 31, 2006
    WebProNews Staff

The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) announced that online ad revenue reached $3.864 billion for the first quarter of 2006.

Internet Ad Revenue Near $4B For Quarter
Internet Ad Spending Continues To Flourish

More advertising spending has found its way into the coffers of companies like Google and Yahoo. The report from IAB pegged first quarter 2006 ad revenue at a new record of $3.864 billion. Fourth quarter 2005 ad revenue hit $3.6 billion, while all of 2005’s ad revenue was over $12.5 billion.

“The steady growth of online advertising is a clear indication that marketers continue to believe in the opportunities and effectiveness that this medium delivers in reaching and engaging their consumers,” said Greg Stuart, CEO, IAB.

A substantial chunk of that first quarter revenue probably ended up in Google’s bank account. Google reported in its first quarter 2006 financials that it had revenue of $2.25 billion. Virtually all of Google’s revenue comes from online advertising.

That would leave roughly $1.6 billion for the rest of the industry to divide up between the various competitors. There will be more opportunity for businesses to spend on Internet advertising, as Microsoft should fully launch its adCenter service in the next few weeks.

The money should keep coming. “It is abundantly clear that marketers are seeing a compelling opportunity to leverage the Internet as a powerful medium that drives both branding and sales results,” said Peter Petrusky, Director, Advisory Services, PricewaterhouseCoopers.

Online spending for advertising is on a pace to reach $15 billion in revenue for all of 2006. That would easily exceed last year’s total and mark the second year in a row that revenue reaches double-digit billions.

Considering Google’s dominance of the industry, it may not be far-fetched to consider that Google is poised to snare around $10 billion of that revenue. Publishing 2.0 blogger Scott Karp posted his opinion that revenue distribution of online ad dollars would mimic the “long tail” of Web 2.0 site popularity:

(W)hy shouldn’t we expect revenue distribution to follow the same pattern, with a handful of companies (i.e. Google, Yahoo) controlling most of the revenue and the remaining online players fighting over the crumbs? When Google found a way to monetize the long tail through AdSense, it became the “head” of a new long tail. We shouldn’t mistake long tail economics to mean that everyone will get a share of the wealth.

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David Utter is a staff writer for WebProNews covering technology and business.