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Online ad sales up in third quarter

Sales hit an estimated $1.75 billion, the fourth consecutive period of gains for the industry, according to new research. Much of the upturn is due to search-engine-related marketing strategies.

Sales from online advertising hit an estimated $1.75 billion in the third quarter, the fourth consecutive period of gains for the industry, according to new research.

Third-quarter sales represent a 20 percent leap from revenue of $1.45 billion in the same period a year ago, and a 5 percent lift from sales of $1.66 billion in the previous three months, according to the trade group Interactive Advertising Bureau (IAB), which sponsored the research, and auditor PricewaterhouseCoopers (PwC), which conducted it.

The quarterly total was also the highest in two years, since the third quarter of 2003 when the dot-com bubble started to deflate. Online advertising peaked in 2000 with $8 billion in revenue before falling to $7.1 billion in 2001, and $6 billion in 2002, according to IAB's numbers.

Sales for the first nine months of 2003 were an estimated $5.04 billion, up about 13 percent from the comparable period a year ago.

IAB CEO Greg Stuart said the growth speaks for itself. "Clearly, the Internet is proving itself a fertile marketplace, attracting advertisers and marketers across the board," Stuart said in a statement.

Much of the upturn has been attributed to search-engine-related marketing strategies: ads linked to keyword searches, or targeted ads generated when people enter queries. Google and Yahoo-owned Overture Services have been the main drivers of this growth, selling advertisers placement in search results relevant to their products and services. Marketers are clinging to this form of advertising because it lets them track the success of ads.

Sales from keyword searches increased to 31 percent of total ad revenue in the second quarter of 2003, according to the IAB, which hasn't broken out such figures for the third quarter yet.

The IAB and PwC's "Advertising Revenue Report" is issued quarterly, and third-quarter data represents an aggregate estimate of sales from the top 15 online ad sellers. Actual third-quarter results will be reported along with representative fourth-quarter revenue in early 2004.