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Online ad spending hits record in 2005

The $12.5 billion spent in U.S. on Internet ads last year is 30 percent more than year before, study finds.

The amount of money spent on Internet advertising in the U.S. rose by 30 percent last year to a record $12.5 billion, according to a report released Thursday by advertising trade group the Interactive Advertising Bureau and independent auditor PricewaterhouseCoopers.

Keyword search ads led the sector, representing 41 percent market share and $5.1 billion in revenue, followed by total display advertising, with 34 percent market share and $4.3 billion in revenue, and classified advertising with 17 percent market share and $2.1 billion in revenue.

Display advertising includes subgroups of display, sponsorship, slotting fees and rich media.

Nearly half (46 percent) of the ad deals were cost-per-thousand impressions, which include display and banner ads, followed by performance deals, which include cost-per-click and cost-per-transaction, which accounted for 41 percent of the online-advertising contracts.

In the fourth quarter of 2005, Internet advertising revenue totaled $3.6 billion, up 34 percent from the year-earlier period.