Apple's April 20 event Stimulus check: Plus-up money Army of the Dead trailer Johnson & Johnson vaccine pause in US Microsoft Surface Laptop 4 Spotify's Car Thing player

Net ad sales continue to rise

Jupiter Communications reports that ad spending on the Web hit an estimated $66 million in the third quarter, the highest level ever, but that the rate of growth slowed over the summer.

Ad spending on the Web hit an estimated $66 million in the third quarter, the highest level ever, but the rate of growth slowed over the summer, according to data released today by Jupiter Communications.

But Jupiter thinks that lull was seasonal and says the growth rate has picked up since September. The new media consulting firm predicts total online ad revenue--which includes online services as well as services like PointCast--will top $300 million this year.

In general, the spending report contained few surprises but reflected trends from earlier in the year, according to Peter Storck, Jupiter's group director of online advertising. Total Web ad revenue in 1996 reached $138 million through September.

As has been the pattern, a handful sites continued to collect a huge piece of Web ad revenue. Of about 900 sites offering ad space, the top ten grabbed 64 percent of ad revenue in the quarter. Sixteen sites drew more than $1.2 million in ad spending.

Top ten web sites by ad revenue
(third quarter 1996, in millions)
Rank Site nameThird quarter revenue YTD revenue
1 Netscape $8.2 $17.9
2 Yahoo 5.6 11.2
3 Infoseek 4.9 10.7
4 Excite 3.6 7.3
5 Lycos 3.4 7.5
6 CNET 3.0 6.2
7 WebCrawler 2.9 5.1
8 ZDNet 2.2 5.4
9 Magellan 1.8 2.9
10 ESPNet
Sports Zone
1.7 4.1

Netscape collected an estimated $8.2 million in ad revenue, making it the top site. But $6.25 million of that came from five search engines that pay $5 million a year for featured buttons.

The next four ad revenue sites were search engines: Yahoo with $5.6 million, InfoSeek with $4.9 million, Excite with $3.6 million, and Lycos with $3.4 million.

Overall, search engines and directories collected 40 percent of ad revenue in the quarter, while content sites accounted for 27 percent.

Although spending is less concentrated among advertisers than for the sites where they advertise, the top 10 advertisers, led by Microsoft, accounted for 28 percent of all spending. Microsoft spent $2.9 million in the third quarter, matching its spending in the previous six months. Web rival Netscape spent about 70 percent of Microsoft's figures for the year to date.

Each of the top-ten spenders were Net-related. The five major search engines were among the quarter's top-ten Web advertisers, largely because of major buys on Netscape.

Top ten advertisers by ad expenditures
(third quarter 1996, in millions)
Rank CompanyThird quarter expenditures YTD expenditures
1 Microsoft $2.9 $5.8
2 AT&T 2.1 3.8
3 Netscape 1.9 4.1
4 Excite 1.5 3.4
5 Infoseek 1.5 3.3
6 IBM 1.5 3.6
7 McKinley Group 1.4 2.8
8 Lycos 1.3 2.6
9 Yahoo 1.2 2.6
10 Nynex 1.2 2.8

The long-awaited arrival of consumer brands spending significant sums on Web ads still remains in the future. Consumer-goods advertisers accounted for only 14 percent of spending in the quarter, about the same level as a year earlier. Four consumer brands--Toyota, Procter & Gamble, Ford, and Saturn--broke into the top 25 spenders, up from two last quarter.

But one ad sales chief thinks that will change in the current quarter.

"I would suspect there's been a shift in share of consumer brands for the quarter," said Ted West, chief operating officer for Softbank Interactive Marketing, a firm that sells ads for Web sites. "They are arriving, and we will continue to see them in 1997, although we might see a softening in the first quarter."

Their spending is dwarfed by spending from Internet, computer telecommunications firms, which accounted for 63 percent.

Finally, Jupiter reported that Web sites seem to be discounting less from their rate cards for Net advertising. Jupiters figures for sites owned by publicly held companies run about 15 percent higher than those sites without published revenue figures, suggesting that's the average discount. Discount ads include free ads in trades plus ads sold below the figures on rate cards.