NEW YORK: The Internet Advertising Bureau reports that online advertising expenditure in 2007 leapt 26% year-on-year to $21.2 billion (€13.6bn; £10.83bn), in the process ousting cable television ($20.9bn) to become the nation's second-largest medium by ad revenues.

The latest data, produced for the IAB by PricewaterhouseCoopers, indicates the web's progressive eclipse of outdoor, magazines, radio, syndication TV, spot TV, and now cable TV.

Network TV, however, remains sovereign despite a 2.0% decline to $22.43bn. But unless there is a startling reversal of fortunes it looks set to abdicate this year in favor of the online heir-presumptive. 

However, despite four consecutive years of robust revenue growth, internet adspend has begun to slow. In 2006, the IAB reported a 35% revenue increase compared with 26% last year.

Search advertising remains marketers' firm favorite, with 41% of spend channelled into the sector – marginally ahead of 2006 which posted 40%. 

Display ads, however, edged-up in revenue terms from 32% of online spend to 34% in 2007.

The lion's share of the online dollar bonanza (89%) was creamed by the nation's top fifty sites, while the top twenty destinations collected 80% of spend. The top ten took 69%.

In terms of payment models, 2007 saw a small increase in performance-related advertising with deals classified either as 'performance' or 'hybrid' rising year-on-year from 52% to 55%.

Conversely, cost-per-thousand deals, which in 2006 accounted for 48% of web spending, dipped from 48% of all revenues to 45%.

Data sourced from AdWeek (USA); additional content by WARC staff