Ad spending on the Internet fell just short of $1 billion last year, and the leading trade group for ad-supported Web sites is declaring 1997 a "breakthrough year."
"Not only did we see significant spending increases and spending at a $1 billion-a-year run rate in the fourth quarter, we also see signs of the Internet being like a traditional medium," said Rich Le Furgy, president of the Internet Advertising Bureau (IAB) and senior vice president of advertising sales for ABC News/ESPN Internet Ventures.
For the year, Internet ad spending reached $906 million, up 240 percent from 1996. Fourth-quarter ad sales hit $335.5 million, up from $227.1 million in the quarter ending in September.
The survey, in which Web sites, consumer online services, and ad-supported email firms report their ad revenues under the condition that figures remain confidential, was compiled by accounting firm Coopers & Lybrand. Because it is self-reported anonymously, the survey is considered an accurate barometer of ad spending.
Computer advertisers accounted for 33 percent of fourth-quarter expenditures; consumer-related ads comprised 26 percent of the quarter's total spending. In the two prior quarters, consumer ad spending had outstripped computer ads, but the fourth quarter saw strong spending by hardware and software vendors.
Among consumer advertisers, 34 percent of the spending came from retailers, while auto advertisers accounted for 20 percent, the second-largest segment. Mail order houses accounted for 10 percent of the consumer-oriented ad spending.
Internet ad spending in its third year is tracking patterns of TV's third year back in 1951, Le Furgy said, suggesting that Net advertising may become as mainstream as TV is today. Still, 1997 Net ad spending fell behind all other media, including billboards. But its 240 percent growth rate far outdistanced cable TV ads, the second fastest-growing category at 15.5 percent.
Although the bulk of Internet ad dollars goes to high-traffic sites, Le Furgy said smaller sites are getting more ad banners, too. "Internet advertising is getting a broader and deeper reach," he said. Spreading ad dollars beyond the top sites was one impetus behind the formation of the IAB.
Although Internet advertising climbed in each quarter last year, growth rates over the previous quarters varied.
"Seeing seasonality is really exciting," said Le Furgy. "It says that the Internet is more of a traditional medium." That means the Net is being factored into ad spending plans in the same way that existing print, TV, and radio ads are--a sign Net advertising has moved into the mainstream for ad planners, he noted.
Ad banners remain the dominant form of Internet advertising, although interstitials--ads that appear on the screen while Web pages download--are growing in popularity.
The survey also found that more than half of participating Web sites use independent services to audit measurements of ad delivery.