Online Ad Industry Rebounded in 2010

The online ad industry has rebounded. In 2010, online ad revenues hit their highest level, reaching $26 billion, after faltering in 2009. Performance-based spending on search advertising and display formats led the way, as did ad buys from retail and telecom brands.

According to the Interactive Advertising Bureau’s “Internet Advertising Revenue Report,” conducted by PricewaterhouseCoopers, online ad revenues rose around 15 percent to $26 billion, up from $22.6 billion in 2009. That year represented a dip in online ad spending, from the previous high of $23.5 billion in 2008.

The IAB and PWC also reported 2010 fourth quarter online ad spending rose 19 percent over Q4 ’09 to $7.5 billion.

“We have now had five consecutive quarters of year-on-year growth,” said Sherrill Mane, SVP industry services at IAB. “At least for the Internet advertising economy, the recession appears to be behind us.”

Though search advertising continues to dominate as the format of choice, search ad revenues were a slightly smaller chunk of the total ad spending pie – 46 percent compared to 47 percent in 2009. Still, search ad revenues increased 12 percent over ’09, reaching $12 billion last year.

Display spending – a bucket including banners, rich media, video ads, and sponsorship units – accounted for 38 percent of online ad revenues in 2010, hitting $9.9 billion. Banners attracted the bulk of that spending at $6.2 billion.

Meanwhile, classified ad spending rose 15 percent in 2010 over 2009, totaling $2.6 billion, as lead generation revenues dropped around 8 percent to $1.3 billion. Spending on ads and links in emails represented a sliver of overall revenues at $195 million, falling 33 percent compared to 2009.

The organizations also reported online ad spending by retail firms accounted for 21 percent of online ad revenues, reaching $5.5 billion in 2010. Telecom, financial services, and auto verticals followed at 16 percent, 12 percent and 11 percent, respectively.

The report showed performance-based pricing models were most popular with advertisers in 2010, attracting 62 percent of online ad dollars. CPM buys fell from a 37 percent share in 2009 to a 33 percent share last year.

Images provided by IAB.