Analysis of the IAB US Internet Advertising Report (First Half 2009)

Internet Advertising Bureau (IAB) released report on US Internet advertising revenues for the first half of 2009. According to the report, Internet advertising revenues were $10.9 billions in the first half of the year, declined by 5.3% compare to the last year during the same period. The revenues were $11.5 billions for first six months of 2008.

Search and display related revenues are on top
According to the report, Search and Display related advertising continue in top two positions in revenue generation. Search ad revenue totaled $5,148 million with 47% of the total Internet advertising revenue. The segment showed an improvement of 1.7% from last year during the same period. When it comes to the Display related ad revenues including banner ads, rich media, digital video and sponsorship, the segment totaled $3,759 million. This accounts for 34% of the total advertising revenue. However, the segment declined by 1.1% when compared to the corresponding period of last year.

Other formats such as Classified ads totaled $1,116 million in revenues declined by 4%. Lead generation format revenues totaled $728 million. And E-mail ad revenues totaled $149 million.

About Pricing models ad revenues
According to the report, Performance based pricing solution is the most prevalent pricing model since 2006 that maintained a strong sequential growth rate. It is followed by CPM/Impression based pricing, which declined as a percentage of revenue over the past several years. Hybrid pricing model has seen the greatest loss in percentage revenue, dipping sharply from 17% in 2004 to 4% in the first six-months of 2009.

In 2004 CPM/Impression based pricing was on top among other solutions with 42% and improved constantly until 2006. However, since 2007, it declined continuously. Moreover, Performance based pricing solution simultaneously increased rapidly to clinch the top share. In 2007, Performance based solutions accounted for 57% and CPM pricing solution accounted for 45%.

In the current year for the first half, Performance based pricing accounts 58%, CPM has 38% and Hybrid related solutions have 4% in the total online advertising revenues.

The drop in online advertising revenues shows that economic crisis can also hit online marketing. During this situation, the growth of Performance based pricing solutions shows that customers are closely watching the results and they are not spending the same as earlier.