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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.

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Elinor Mills
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Elinor Mills Former Staff Writer
Elinor Mills covers Internet security and privacy. She joined CNET News in 2005 after working as a foreign correspondent for Reuters in Portugal and writing for The Industry Standard, the IDG News Service and the Associated Press.
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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.