IAB: 2010 was best year ever for Internet advertising

Sep 15, 2011

By Stanley Schwartz

NEW YORK—With about $26 billion in sales, Internet advertising posted its best year ever in 2010, said Sherill Mane, senior vice president for industry services at the Internet Advertising Bureau.

That total was 15 percent more than in 2009, and for the first time a single quarter broke the $7 billion mark. Mane noted that U.S. mobile advertising accounted for $550 million to $650 million of the 2010 total. Mobile ad revenue was defined in the study as “advertising tailored to and delivered through wireless mobile devices such as smartphones, feature phones, and media tablets.”

The 14.9 percent increase in Internet advertising was more than two times greater than advertising in other media for the year. The data, collected by The Nielsen Co., also showed that Internet advertising outpaced Cable TV at 13.9 percent. The same research showed local newspaper advertising with a slight loss of minus .07 percent.

With five consecutive quarters of year-on-year growth, Mane said, “It appears that we have weathered the storm,” and that the economic recession is behind us.

Display Internet advertising was up 24 percent and directories were up 24 percent. The report showed that spending on video ads is expected to increase 22 percent in the coming year.

David Silverman, a partner with Price Waterhouse Coopers, noted that this was the inaugural year for showing mobile in the survey, but it did not break out that information, keeping it within the grouping with other media. He also noted that online classified has stabilized, with 24 percent growth.

Digital advertising continues to show impressive growth, he added.

Sponsorships are showing some resilience, as well, he said. That category was up 88 percent over the previous year. Retail was the dominant category of spending on advertising, with leisure, pharmaceutical and heath care up, too.

Cross-media advertising passed newspapers as a discrete category, Silverman added, and compared to broadcast and cable, Internet has outpaced both in terms of growth.

John Suhler, founding partner of Veronis Suhler Stevenson, said his company has been looking at communications industry spending, consumption and trends for 25 years and it has data as far back as 1975.

He looked at the last five years of actual results and compared targeted media, such as Internet (search and advertising), mobile advertising and content, digital out-of-home, subscription TV advertising and business-to-business magazines with traditional media, such as newspapers, TV, Radio, yellow pages and consumer magazines.

His research predicts that between 2004 and 2014, targeted media would increase 5.8 percent. At the same time, traditional media advertising would fall 1 percent.

For total communications spending, Suhler looked at time spent per capita, by consumers. Taken all together, he said there is consistent long-term  growth in consuming media.

His predictions showed daily newspaper consumption dropping along with broadcast TV and radio.

“Dollars follow eyeballs,” he said.

Suhler said mobile advertising would increase to $8 billion by 2014. “The penetration rates of wireless devices is phenomenal. There are tens of millions of devices.”

Most early predictions said banner advertising would drop off, but the report showed a 23 percent increase in 2010.

Mane said she attributed the increase to innovation, creativity and quality. There had been a learning curve on how to harness the power of the Internet. Plus, a lot of brand advertising dollars moved to the Internet.

And what should retailers take from this study?

Silverman said, “Clearly the Internet is important to retailer’s strategy. … the industry is growing so much, it’s important to their mix.”