US Online Ad Sales Grow 14% in Q2

12 November 2003

America's online advertising industry is on the up and up, according to the latest data from the Interactive Advertising Bureau in New York.

For the third quarter in succession online media have enjoyed a sales upswing, notching a 14% year-on-year hike in Q2 2003. Ad revenues for the period totalled $1.66 billion (€1.44bn; £1.00bn), representing a 1.7% improvement over the preceding quarter. For the first half of 2003, aggregated sales rose 11% to $3.3 billion.

This was hailed by observers as good news after the 2001/2002 nadir which saw seven consecutive quarters of decline -- but on a quarterly basis the numbers still lag the $2.09 billion recorded in Q2 2000.

The IAB's figures, culled from over one hundred leading online advertising firms, differ slightly from those of media researcher TNS Media Intelligence/CMR. In August the latter reported H1 ad sales up 15% to $3.2 billion. The IAB's data, however, are more detailed, analysing revenue by ad format.

Continuing problems at troubled giant America Online (ad revenue down 45% to $405 million) continue to impact adversely on the sector as whole. If AOL sales data are excluded from the industry total, H1 ad revenues would have better than doubled from 11% to 28%.

US Bancorp Piper Jaffray analyst Safa Rashtchy believes that H1 online ad revenues were "highly skewed by AOL's numbers". He expects to see accelerating growth in overall web ad revenues in H2 and 15% to 20% year-on-year growth in 2004.

And according to those with an ax to hone, so-called 'rich media' will blaze the trail to cyber Eldorado. New York-based Unicast Communications predicts a year-on-year tripling in volume of its full-page "superstitial" rich-media ad format in the first quarter of 2004 . The format can display video at higher speeds than previously possible.

"In 2004, what you will see is [brand advertisers] finally saying, 'There are opportunities here that rival offline media,'" says Unicast svp Allie Savarino.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff