Online advertising revenues breaks records as Internet giants go on buying spree

Online advertising revenues breaks records as Internet giants go on buying spree

Author | Jagadeesh Krishnamurthy | Friday, May 25,2007 9:04 AM

Online advertising revenues breaks records as Internet giants go on buying spree

The latest Interactive Advertising Bureau (IAB) Internet Advertising Revenue Report reveals that online advertising revenues in 2006 has increased to $16.9 billion globally, which is a 35 per cent increase over the records in 2005 of $12.5 billion. A very interestingly pattern has emerged in the market, where Internet giants like Google, Yahoo!, MSN and AOL are on a buying spree with almost all of them buying prominent online advertising services at steep prices.

The report quoted: “Consumer-related advertisers accounted for the largest category of revenues, at 52 per cent of 2006 full year revenues, up from 51 per cent from the full year 2005. Financial services, the second-largest category, accounted for 16 per cent, which was followed by computing advertisers at 10 per cent. Within the consumer category the biggest sub-categories were retail (47 per cent of 2006 consumer revenue category), automotive (22 per cent), leisure (13 per cent), entertainment (8 per cent) and packaged goods (8 per cent).”

The report observed that search revenue accounted for 40 per cent of 2006 full year revenues, slightly lower than the 41 per cent for the full year 2005. Display advertising, classifieds and referrals accounted for 32 per cent, 18 per cent, and 8 per cent of 2006 full year revenues respectively.

Looking forward for a similar continued growth in the search advertising industry, almost all the Internet biggies have recently bought newer online advertising services.

The race began with Google, who announced their plans to acquire DoubleClick for $3.1 billion in cash. While, Yahoo! had announced its decision to acquire Right Media, creator of the Right Media Exchange, for $680 million, AOL announced its purchase of German firm Adtech. Most recently and in one of its biggest acquisitions, Microsoft has announced the acquisition of aQuantive, a digital marketing firm for a staggering $6 billion.

With such frenzy going around the online advertising industry globally, India too will be in their radars. The Indian online growth has also revealed such great figures in the past. But Internet is still not among the main medium of all brands. We will have to wait for this transition to happen in the country. Till then we can just hope that Internet advertising continues to grow in the same manner across the world.

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