'97 Web Ad Revenue Estimated at $597 Million

Larger budgets and an expanding advertiser base helped boost Web advertising revenue to an estimated $597.1 million in 1997, up 152.6% over $236.4 million in 1996, says an industry survey.

Quarter to quarter Web ad revenue growth over the past year ranged from 23.6% to 58.7% with an estimated $84.0 million in the first quarter, $133.3 million in the second quarter, $169.8 million in the third quarter and $210.0 million in the fourth quarter.

The figures are from Stamford, CT-based Cowles/Simba Information Inc.’s Electronic Advertising & Marketplace Report (EAMR) newsletter.

“Growth was driven by several factors, including bigger ad budgets for existing Web advertisers; the market entry of new advertisers; the increasing influence of rep networks, giving exposure to both advertisers and Web sites; and a continuing sense of peer pressure among advertisers that are afraid of falling behind their competitors,” said Matt Kinsman, editor of the newsletter.

Despite the call from many advertisers for more targeted marketing, the search engines remain almost a default buy among Web advertisers because they consistently offer the largest audience at one Web location, the report said.

Yahoo was the top ad-supported site for the second year in a row at $53.2 million, up 180.0% from $19.0 million in 1996 according to EAMR estimates. Second-ranking Excite narrowed the gap with Yahoo largely as a result of its acquisition of WebCrawler from America Online last year. Excite generated an estimated $40.2 million in ad revenue last year, up 171.6% from $14.8 million in 1996.

Despite the good news, “There are still a number of factors that cast a shadow over the actual health of the market,” Kinsman said. “A handful of sites continue to dominate the market and those same sites are dependent on a handful of the same advertisers month-to-month. Larger sites such as Yahoo and ZDNet are beginning to report profits, but the majority of profitable ad- supported Web sites are small companies that have been successful due to low startup costs rather than tremendous performance.”

The newsletter tracks Web ad revenue on a monthly basis, surveying leading ad-supported sites and projecting an industry total based on the percentage of revenue these sites represent.