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Internet Ad Revenues Show Double-Digit Annual Growth to $37 Billion

Companies report 15% increase over 2011

The Interactive Advertising Bureau says digital advertising revenues rose to $36.6 billion in 2012 and are second only to broadcast television’s ad revenue, according to its Internet Advertising Revenue Report.

Representing a 15% rise over 2011’s full-year number ($31.7 billion), the report, which was prepared by PricewaterhouseCoopers U.S., also shows 2012’s fourth quarter numbers for the sector, which increased by 15% ($1.34 billion) to $10.31 billion.

Accounting for 9% of total Internet ad revenue in 2012, mobile reached triple-digit growth year-over-year, increasing 111% to $3.4 billion, following 2011’s 149% year-over-year rise to $1.6 billion.

“Mobile, in particular, soared due to its ubiquity and intrinsic ability to serve as a powerful digital dashboard that travels with you from morning commute to nighttime video viewing and beyond,” said IAB President and CEO Randall Rothenberg.

Digital video, considered a component of display-related advertising, increased 29% with revenue of $2.3 billion, as compared to $1.8 billion in 2011. In total, the category of display-related advertising (which also covers banner ads, rich media and sponsorship) in 2012 totaled $12 billion, representing a 33% increase from 2011’s $11 billion.

Totaling 46% of 2012 Internet ad revenue, searches brought in $16.9 billion, up 14.5% from $14.8 billion in 2011.

Lead generation revenues were up 11% from 2011’s $1.5 billion.

Down for 2012, classifieds brought in only 7% of revenue with $2.4 billion. Email revenues were also down, accounting for only $156 million, or 0.4% of the total.

Retail advertisers continue to represent the largest category of Internet ad spending: 20% in 2012. Financial services invested the next largest amount, accounting for 13% of the revenues.

Performance-based pricing remained the preferred method for generating revenue, followed by impression-based and hybrid pricing models.

“For the third consecutive year, digital media ad revenue has racked up double-digit growth, demonstrating the strength of interactive advertising and marketers’ commitment to be where consumers are,” said Sherrill Mane, senior vice president of research, analytics and measurement for IAB.

The IAB Internet Advertising Revenue Report is conducted independently by the New Media Group of PwC and is based upon data compiled from information from the companies selling ads online.

The survey includes data for online advertising revenues from websites, commercial online services, free email providers and other companies. The full report is issued twice yearly for full and half-year data. Quarterly estimates are given for Q1 and Q3.