According to a study published on April 20, online advertising revenue in the United States increased by 30% in 2005 compared to 2004. However, online advertising still accounts for a small fraction of total advertising spending compared to traditional forms of advertising.
The organizations conducting the aforementioned study, the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC), assessed that online advertising in the U.S. in 2005 achieved a “quantum leap.” Statistics show that while online advertising revenue in the U.S. was only $9.6 billion in 2004, it reached $12.5 billion in 2005.
According to IAB and PwC, the impressive growth in advertising revenue in 2005 was mainly due to new technologies that enabled companies to have various options for promoting their products and services online.
However, online advertising in the U.S. in 2005 still accounted for only 4.7% of total spending across the entire advertising industry. Spending on online advertising as a percentage of total advertising expenditure increased from 3.7% in 2004 but remains modest compared to traditional advertising forms. Traditional advertising methods are still preferred by many companies, for instance, direct mail advertising in the U.S. reached $56.6 billion in 2005, newspaper advertising totaled $47.9 billion, and radio and television advertising amounted to $35 billion.
Following search engine advertising, banner advertising ranks second with 20% of total revenue, while advertising on niche sites accounts for 17%.
