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Ad spending in 1999 hits $4.62 billion

Net ad revenues surge in 1999 in a sign that marketers are no longer questioning whether the Web is a good place to invest ad dollars.

    Net ad revenues surged last year, hitting $4.62 billion, in a sign that marketers are no longer questioning whether the Web is a good place to invest ad dollars, the Internet Advertising Bureau reported today.

    Ad spending's rapid rise
    The Net is the fastest- growing medium for advertising, according to a recent report.
    1995 $50 million (estimated)
    1996 $267 million
    1997 $906.5 million
    1998 $1.92 billion
    1999 $4.62 billion
    Source: Internet Advertising Bureau
    The $4.62 billion figure is a dramatic jump from the estimated $50 million in ad revenues reported for 1995 and is nearly double online ad spending for 1998. In addition, it eclipses revenues for television and cable in their first five years as viable advertising mediums based on inflation-adjusted figures, said Rich LeFurgy, the bureau's chairman.

    Spending on TV ads continues to reign, with an estimated $215 billion spent last year, according to a report by advertising agency McCann-Erickson. Still, the Internet remains the fastest-growing medium for advertising.

    "It's not surprising that Internet advertising is growing as strong as it is," LeFurgy said. "It is the newest ad platform in 50 years, and it combines the best of TV, direct mail, customer service and retail transactions."

    The bureau and its 300 members expect ad revenues to continue to climb this year despite the recent slide in tech stocks. Internet companies likely will scrutinize ad spending, but the need to drive traffic to company Web sites and offline stores will be critical to survival.

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    "Any kind of restrictions on dot-com companies are going to favor rather limited growth," LeFurgy said.

    Today's report, conducted by PricewaterhouseCoopers in cooperation with the Internet Advertising Bureau, represents data from more than 200 companies.

    In the fourth quarter of last year, consumer-related businesses-including retail mail order, autos, travel and toys--represented the strongest industry spenders.

    Other big spenders included financial services, computing and new media companies.

    Dot-commercials Reflecting e-commerce's continuing strength, hybrid deals accounted for 53 percent of revenue transactions for the year. A hybrid deal allows marketers to pay lower rates for banner ads as long as they pay Web sites a bounty when surfers click through their ads.