Online business Toolkit

Search-based ads increase online revenue

Published: 20 Sep 2004 18:10 BST

Internet advertising is continuing to increase with the latest US figures showing the medium generated $4.6bn in the first six months of 2004 -- a 40 percent increase over the first half of 2003.

Search-based adverts accounted for 40 percent of revenues in the second quarter of 2004, a 97 percent increase in absolute dollars compared to Q2 2003. Display ads, the next most popular form of advertising, only accounted for 20 percent of revenues, according to an ad revenue report sponsored by the US-based Interactive Advertising Bureau (IAB).

Search-based advertising is gaining ground as it is more targeted, only appearing when a consumer has searched on a relevant topic. Also advertisers only have to pay when consumers click on ads, not when they view them.

Internet advertising peaked during the dot-com boom, achieving record revenues of $2.12bn in the fourth quarter of 2000. But after the bubble burst the sector began to decline -- hitting a low of $1.45bin in the third quarter of 2002. Since the end of 2002, there has been some recovery with revenues rising for the last seven quarters.

The majority of advertising revenue comes from consumer advertising, which accounted for 49 percent of advertising revenue in Q2 2004. Computing adverts are the next most popular, accounting for 35 percent of revenue, according to IAB.

The Internet Ad Revenue Report is conducted independently by the New Media Group of PricewaterhouseCoopers.