September 26, 2005

Web Advertising Up 26 Percent in 2nd Quarter

NEW YORK (Reuters) - U.S. Internet advertising revenue grew 26 percent to $3 billion in the second quarter, driven by paid search listings and more sophisticated video and audio ads known as rich media, according to a study released on Monday.

The data provided by the Interactive Advertising Bureau and PricewaterhouseCoopers bolsters expectations that advertisers are spending more on the Internet as consumers devote more time to the Web and away from other media.

Online ad revenue in the first half of the year also rose 26 percent, to $5.8 billion, from a year earlier.

"The consistent growth in overall revenues shows marketers may be shifting more of their total advertising budgets to online," said David Silverman, partner at PricewaterhousCoopers.

Paid search listings, which allow advertisers to pay to display ads next to relevant search terms, remain the bulk of online advertising at 40 percent, buoying results for Internet companies like Yahoo and Google .

Regular display ads, such as Web page banners, represent 20 percent of online advertising, classified ads grew slightly to 18 percent, while rich media comprises 8 percent.

The IAB represents 200 online companies responsible for selling nearly 90 percent of Internet advertising in the United States.