Online advertising revenues continue to climb upwards, according to June 2012 figures from the IAB and PricewaterhouseCoopers (PwC). Revenues in Q1 set a new peak of $8.4 billion, representing a 15% increase from Q1 2011’s $7.3 billion. Despite this solid growth rate, it actually represents a slowdown from Q4, which grew at a more rapid 20.4% year-over-year, to $8.94 billion. The Q1 growth rate of 15% compares with 17.47% projected growth this year in US wired and mobile internet advertising spending, per a separate report released in June by PwC.
Q1’s Peak Follows New Highs Reached in 2011
The Q1 growth comes after April 2012 figures, also from the IAB and PwC, showing that internet advertising revenues reached a record $31.74 billion in 2011, representing a 21.9% increase from $26.04 billion in 2010. This was the most rapid year-over-year growth since 2007 (26%), and drove online ad revenues past cable TV ad revenues (including national networks and local cable TV), which were $30 billion. Looking back over the past 10 years, the April report notes that online ad revenues have a compound annual growth rate of 20.3%, with 29 of 36 quarters since 2003 seeing positive growth.
Q4 revenues rose 20.4% year-over-year to $8.97 billion, also up almost 15% quarter-over-quarter, while H2 revenues accounted for 53% of the 2011 total. The year-over-year growth in Q4 revenues was the fastest since Q4 2007.
Search Retains Top Share; Mobile Grows Fastest
Search remained the top advertising format by revenue share in 2011, a position it has held since 2006. Search accounted for 46.5% of revenues, up almost 4% from 44.7% in 2010. In dollar terms, search revenues reached $14.8 billion, representing an increase of close to 27% from $11.7 billion the previous year.
Display-related ad revenues was the next-largest category, at 34.8% share, comprised of display banner ad (21.5%), rich media (4.1%), digital video (5.7%), and sponsorship (3.5%). Total display-related revenues were $11.1 billion, marking a 15% rise from $9.6 billion in 2010. While display banner ad and rich media both declined in their share of total revenues, digital video and sponsorship each saw roughly a 1% point increase in share.
Classifieds revenues accounted for 8.1% of 2011 revenues, down from 10% in 2010. In dollar terms, 2011 revenue was $2.6 billion, unchanged from the previous year.
Mobile took 5% share of the 2011 revenues, up from 3% in 2010. This was the fastest-growing category, rising 149% to $1.6 billion, from $641 million in 2010. Mobile revenues fueled 3.7% of the total online ad revenue growth of 22%.
The share of total revenues held by lead generation fell from 5.1% to 4.8%, although the dollar amount of lead generation revenues grew 15% from $1.3 billion to $1.5 billion.
Email revenues accounted for the smallest share of revenues, at 0.7%, unchanged from 2010, with 9% growth in dollar amount from $195 million to $213 million.
2012 revenue projections by format, along with other 2011 data from a variety of recent studies can be found here.
Retail Industry Still Biggest Spender
Retail advertisers represented the largest vertical in terms of internet ad spending, at 22% share, slightly up from 21% last year. Retail industry spending in 2011 stood at $7.1 billion, up 21% from $5.5 billion a year earlier.
Financial services was the next-largest vertical, at 13% share, or $4.1 billion, up from 12% share (and $3.2 billion in spending) in 2010. Financial services overtook telecom, which fell from 13% share in 2010 to 12% share in 2011, although spending rose from $3.5 to $3.9 billion. Automotive advertisers (11%; $3.5 billion) and computing advertisers (8%; $2.7 billion) rounded out the top 5 verticals, both with unchanged share of total revenues from 2010.
Leisure travel (8%), consumer packaged goods (6%), pharmaceuticals and healthcare (5%), media (5%), and entertainment (4%) were the other verticals comprising the top 10.
- Ads using performance-based models increased from 61% to 64% share of the total revenues. Impression-based ad share of spend fell from 33% to 31%, continuing a decline begun in 2007. Hybrid ads accounted for the remaining 4% share of online ad revenue, which is significantly down from 13% share in 2005.
- Performance-based pricing held 64% share of revenues in Q4, up slightly from 63% in Q4 2010. The CPM model held steady at 32% share, while hybrid decreased from 5% to 4% in that period.
- Search accounted for 46% share of spend in Q4 2011, up from 43% in Q4 2010. Display-related advertising held 35.3% share, comprised of display banner ads (22%), digital video (5.5%), sponsorship (4.2%), and rich media (3.5%).
- The online advertising space remained concentrated in Q4 2011, with the top 10 ad-selling companies accounting for 71% of total revenues, down marginally from 72% a year earlier. Overall, the top 50 companies commanded 90% of online ad revenues in Q4 2011.