Internet Advertising Maintains Growth in 2005

Online advertising revenues grew by an impressive 30 percent in 2005 to reach $12.5 billion, the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) confirmed today.

The rate was just short of the 33 percent growth experienced in 2004. IAB CEO Greg Stuart attributed the apparent dip in growth to the “law of large numbers” (define) and said the association projects 2006 will see a spending increase of between 25 and 30 percent.

“To have three consecutive years of 30 percent or over is monstrous,” said Stuart. “I would never have imagined something like this, that it would continue to grow at this incredible rate.”

Across the board, marketers spent $12.5 billion on interactive advertising last year, up from $9.6 billion in 2004, the IAB and PwC said. The announcement was a verification of previous spending estimates for the year.

Q4 spending was $3.6 billion, representing a 34 percent year over year spike.

Search remained the growth leader last year, though display advertising generated almost as much revenue. Marketers spent 41 percent more on keywords than they did in 2004, while a combined total of display categories, including display advertising, sponsorship, slotting fees and rich media, grew by 34 percent.

“Search continues to be strong,” said Stuart. “Display has become almost equally strong. They’re running neck and neck.”

Meanwhile, classified spending increased by 17 percent, email by 2 percent, and referrals and lead generation by 6 percent.