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Tech Industry

Services sector buoys Web-ad spending

Business and consumer services led an increase in spending on online ads, demonstrating that the Net is capturing the attention of traditional advertisers, a study says.

Business and consumer services led the first quarter increase in online-advertising spending, demonstrating that the Net is gaining momentum in capturing the attention of traditional advertisers, according to a study released Wednesday by Nielsen/NetRatings.

The business and consumer services sector, which includes traditional advertisers such as financial institutions and telecommunications companies, accounted for 58 percent of the $172 million spent on ads in the first quarter.

"We're beginning to see evidence across the board that large traditional advertisers are spending more money on online advertising," said Charles Buchwalter, analytics vice president for Nielsen/NetRatings.

Traditional advertisers, which also include everything from clothing retailers to automakers, continue to spend the bulk of their ad dollars on print publications, television and radio. However, the latest results show further signs that they're shifting a larger portion of their ad budgets to Web advertising.

The $576.3 million spent on Web ads by the business and consumer services sector in the first quarter represented an increase of $100 million, or 21 percent, compared with year-ago figures, according to Nielsen/NetRatings.

The auto industry increased its online advertising by 91 percent, or $27 million, to $57 million in the first quarter, according to the study. Carmakers contributed the second largest slice to the overall increase in total Net advertising, with 16 percent share.

The pharmaceutical industry ranked third, increasing its online-advertising spending by 59 percent, or $26 million, to $70 million in the first quarter. The drug and remedies industry accounted for 15 percent of the growth in total online advertising.

Although traditional advertisers spend roughly 2.5 percent to 3 percent of their total advertising budgets on online advertising, Buchwalter said that figure is expected to grow to more than 5 percent in the next 18 months.

Last month, the Interactive Advertising Bureau reported that online advertising increased for two consecutive quarters. Online advertising reached $1.69 billion in the first quarter, up 11 percent from a year ago.