Online Ad Spending Continues Growth in 2005

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Online ad revenue in the fourth quarter of 2005 hit $3.6 billion—a 35 percent increase from the previous year—according to a report released Wednesday by PricewaterhouseCoopers. Spending for the year totaled $12.5 billion, a 30 percent increase from 2004’s estimated $9.4 billion.

While online ad revenue surpassed expectations for the year, 2005’s 30 percent increase represented a slight deceleration from the 32 percent increase from 2003 to 2004. The report closely mirrors the trends seen in fourth quarter stock reports recently issued by Google and Yahoo!. Google’s revenues slowed from nearly 200 percent gains between 2003 and 2004 to 86 percent last year, while Yahoo! slowed from 62 percent to 39 percent. The decelerated growth is expected to continue, with 2006 revenues expected to gain about 20 percent.

The Interactive Advertising Bureau sponsored the industry study, which PricewaterhouseCoopers based on the top 15 internet ad sellers. Their final results for the entire year are expected to be released in April.

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