US online ad revenues up 15%

14 April 2011

NEW YORK: US online advertising revenues rose by 14.9% last year to hit a new annual high of $26bn, according to the IAB and PricewaterhouseCoopers US.

Encouragingly, IAB/PwC's Q4 2010 figures indicated accelerating growth, with revenues of $7.45bn for the three-month period representing a year-on-year increase of 19% and a quarter-on-quarter increase of 16%.

This suggests that US advertisers are shaking off the after-effects of the recession and are now more willing to launch digital initiatives. The IAB/PwC figures also correspond closely with Warc forecasts, which predicted US internet adspend growth of 14.3% from 2009 to 2010.

"We now have had five consecutive quarters of growth since the great recession impacted interactive advertising in 2009," said Sherrill Mane, senior vice president for industry services at the IAB.

"The record-breaking revenue in Q4 2010 and the total year indicate that interactive advertising has weathered the storm and then some."

David Silverman, PwC Assurance partner, added: "It looks like the worst is behind and significant growth going into 2011."

Within the various online ad categories, search was up 12% year on year, accounting for just over $12bn, or 46% of 2010's revenues.

Smaller categories grew faster still, with display ads up 24% to $9.9bn. Within the display category, sponsorships were up 88% to $718m, digital video rose 40% to $1.4bn and ad banners were up 23% to $6.2bn.

Mane attributed this increase in banner revenues to "newer, bigger, better creative units" and "an overall switch in the mindset of advertisers regarding how to harness the power of the internet for brand advertising".

But some online categories suffered tepid growth or a decline in revenues for 2010.

Classifieds maintained its 10% share, rising from $2.3bn to $2.6bn, while lead generation dropped from $1.5bn to $1.3bn and email ads suffered a 33% year-on-year decline to just $195m.

John Suhler, founding partner of Veronis Suhler Stevenson, put the new IAB/PwC report in context, pointing out that the time US consumers spent online as a proportion of the total time they spent with media had risen from 4% in 2000 to over 10% today.

"Dollars follow eyeballs - I don't care what the medium is," he added.

Data sourced from IAB/PwC US; additional content by Warc staff