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March 07, 2007

U.S. Internet Advertising Rises 34 Percent in 2006

The way in which consumers now get their information has been changing and will continue to change as technology continues to evolve. As the number of households implementing DVR systems increases, the number of individuals viewing commercials declines. While the programming can dictate the probability of individuals viewing  advertisements, the reality is that companies must seek alternative ways to reach their target audience.

Many companies are turning to Internet advertising to get their message out to potential customers. In fact, U.S. Internet advertising surged 34 percent last year to reach a record high, showing that companies are moving more of their marketing and promotion spending into this new media.

The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers conducted a survey of leading companies that sell advertising space online, such as Yahoo!, Inc., and Google (News - Alert), Inc. These companies are attracting more money from marketers hoping to reach consumers who are spending more of their media time on the Internet.

“Results for 2006 confirm a very healthy environment for online advertising," David Silverman, a partner at PricewaterhouseCoopers, said in a statement. "All signs point to a steady increase in the level of spend by traditional advertisers that are using online advertising as an important part of their media mix.”

The IAB and PricewaterhouseCoopers have tracked online ad spending since 1996. These companies provide a more detailed breakdown twice yearly, with the next one due in April. Early results, however show that 2006 revenues rose to an estimated $16.8 billion from $12.5 billion in 2005.

The fourth quarter of 2006 showed revenues that totaled around $4.8 billion, making it the highest quarter reported. This is a 32 percent increase over the same period in 2005, according to the report.

Peter Petrusky, a PricewaterhouseCoopers director, noted that the rise in spending signals a recognition by traditional marketers that Internet advertising is effectively reaching consumers. “The maturation of the Internet as an effective advertising medium is directly tied to its ability to deliver qualified audiences to marketers,” Petrusky said in a statement.

The practice of getting a message out to a particular segment of the market will continue to change, although Internet advertising is expected to have a strong presence for quite a while. The challenge for these companies will be to ensure that their message stands out against competitors. While this has always been the case in advertising, the environment of the Internet is quite different, posing new challenges every day. However, with the potential for the advertising dollar, the ‘powers that be’ always figure out a way to make it profitable.

Be sure to check out TMCnet’s White Paper Library, which provides a selection of in-depth information on relevant topics affecting the IP Communications industry. The library offers white papers, case studies and other documents which are free to registered users. The papers are authored by industry leaders, who, in turn, receive qualified sales leads from interested parties.

Susan J. Campbell is a contributing editor for TMC (News - Alert) and has also written for To see more of her articles, please visit Susan J. Campbell’s columnist page.


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