Sponsored-keyword search revenues in the US increased to 35 per cent of overall online advertising revenues in 2003, up from 15 per cent in 2002, according to a report sponsored by the Interactive Advertising Bureau (IAB) and conducted by PricewaterhouseCoopers.
Total Internet advertising revenues rose nearly 21 per cent last year, ending 2003 at just under $7.3bn, the first year-on-year increase since 2000. Online ad sellers reported $2.2bn in revenues for the fourth quarter of 2003, up more than 38 per cent from the same period in 2002.
There has been a continued diversification in spending on advertising formats, according to the IAB's Internet Advertising Revenue Report. Keyword search-related ads accounted for 40 per cent of 2003 fourth quarter Internet advertising revenues, up from 21 per cent for the same period in 2002.
Banner advertisements accounted for 21 per cent of total 2003 on-line ad revenues, down from 29 per cent in 2002. Classified advertising revenues accounted for 17 per cent of 2003 revenues, up from 15 per cent reported in 2002, while rich media ad revenues claimed eight per cent of 2003 revenues, up from five per cent in 2002.
Although figures for the UK and Europe are not yet available, trends in the US are being followed in Europe, said Danny Meadows-Klue, chairman of the UK Interactive Advertising Bureau.
"One of the interesting things about the keyword search sector is the way that it is bringing new advertisers online," he told ElectricNews.Net. "Even one-person micro-businesses are spending on keywords. They are realising that they can cheaply and directly reach a potential customer at the moment of greatest interest," he added.
In terms of online advertising as a percentage of overall cross-media spend in Europe, there is a lot of variation across the continent, noted Meadows-Klue. The percentage for Finland is 5 per cent, while in Greece it's 0.5 per cent.
The most interesting developments in the European online market are in the EU accession states, he said. "The Baltic region is leapfrogging ahead without having to make the same mistakes as were made in the UK and Ireland in the late 1990s. Estonia already has a figure of three per cent (for online advertising revenues)."
Meanwhile, consumer-targeted advertisers continued to dominate online ad spending in the US, accounting for 37 per cent of revenues. Spending by the media and financial industries dropped slightly, from 13 per cent to 12 per cent and from 12 per cent to 11 per cent respectively, according to the US survey.
PricewaterhouseCoopers compiled the data for the report from the top 15 online ad sellers, which account for 80 per cent of total industry revenues. IAB member companies such as AOL, Yahoo!, MSN, Google and DoubleClick account for 85 per cent of online advertising sold in the US, according to the organisation.