IAB: Nearly $1 Billion Spent on Internet Ads in 1997

The Internet Advertising Bureau said its latest report shows that spending for advertisements on the Internet reached about $906 million in 1997, a “breakthrough year.”

If fourth-quarter spending patterns continue in 1998, the industry would become a billion-dollar business.

The 1997 total represents an increase of 240% from 1996, according to the report. And fourth-quarter ad sales hit $335.5 million, up from $227.1 million in the quarter ending in September. Total revenues in the first quarter of 1997 were $129.5 million, the second quarter posted $214.4 million.

The survey was done by Coopers & Lybrand and is considered one of the best estimates of the nebulous dollar amounts that get bandied about in the world of Internet advertising, as Web operations report their figures anonymously.

“1997 was definitely a breakthrough year for Internet advertising,” said Rich LeFurgy, IAB chairman and senior vice president, advertising, ABC News/ESPN Internet Ventures. “The industry saw continued spectacular growth, with a billion dollar run-rate established in the last quarter of the year. This places the medium within the ranks of traditional media for the first time.”

Computer advertisers accounted for 33% of fourth-quarter expenditures; consumer-related ads comprised 26%, according to the survey. In the two prior quarters, consumer ad spending had outstripped computer ads, but the fourth quarter saw strong spending by hardware and software vendors.

Although the rate of increase in ad spending for Internet media is impressive, it still fell behind all other forms of media, including billboards. The IAB study, entitled “Advertising Revenue Reporting Program,” represents data from more than 200 publishers. The survey includes data concerning online advertising revenues from Web sites, commercial online services, off-line delivery services and email providers.

“We are witnessing the evolution of the Internet into a vitally important consumer advertising medium, with increased online spending and consumer usage, underscoring its value to advertisers,” said Tom Hyland, chairman of the Coopers & Lybrand New Media Group.